The Investment Industry Regulatory Organization of Canada (IIROC) got the green light to implement comprehensive reforms intended to enhance the relationship between investors and advisors.

CSA gave approval March 22 to amended rules in the Client Relationship Model that provide greater disclosure requirements for advisors and enhance the standards they must meet when assessing the suitability of investments for clients.

The new model aims to increase transparency for investors surrounding fees they pay, services they receive, potential conflicts of interest and account performance.

“The Client Relationship Model is an important initiative that will enhance the advisor-client relationship by building on the standard of care required of registered investment professionals and IIROC member firms,” said Susan Wolburgh Jenah, IIROC’s president and CEO. “We have consulted extensively with many stakeholders in finalizing these reforms and will now turn our attention to ensuring they are effectively implemented.”

Amendments will clarify and strengthen the obligations of advisors to their clients in the following areas:

  • Improved account relationship disclosure, including more information to investors on account types, the services they’ll receive, as well as transaction and account fees and charges;
  • Enhanced suitability assessment standards to ensure investments are appropriate to each client’s objectives and time horizon, as well as to the composition and risk level of the investor’s overall portfolio. Additional “trigger” events will also require that suitability assessment reviews are conducted more frequently;
  • Introduction of enhanced standards for the disclosure and management of existing or potential conflicts of interest between investors and their advisor and/or firm; and
  • Introduction of requirements to provide clear information on statements about the cost of investments and the performance of investor accounts.

Some elements of the reformed model will come into effect immediately and others will be transitioned over a two-year period.

At the request of the CSA, implementation of the IIROC account performance reporting requirements has been suspended pending any necessary harmonization related to the finalization of equivalent CSA proposals.