FAIR Canada recently provided comments in response to IIROC’s request for comments on the proposed know your client (KYC) and suitability guidance notice (09-0293) issued on October 2, 2009.
FAIR Canada supports IIROC’s initiative to provide more guidance on the KYC and suitability obligations of investment dealers. The suitability of investments is traditionally the largest source of client complaints filed with dealers, and suitability obligations are more important than ever with the increasing number and complexity of investment products available. We believe that many dealers would welcome more detailed guidance on how the regulators will administer and interpret the rules. However, the need for guidance applies to investors as well as dealers. Most retail clients do not understand the suitability obligation, or their rights and responsibilities under it.
It is FAIR Canada’s submission that in addition to developing guidelines for IIROC’s members, IIROC should develop educational materials for retail investors. Investors need to better understand the KYC and suitability requirements. Since investors are IIROC stakeholders, their needs should also be addressed.
FAIR Canada is of the view that the proposed guidelines for members are not comprehensive or clear enough. FAIR Canada proposes that IIROC should undertake an initiative to develop stronger and more extensive guidance to both its Dealer Members and investors on the KYC and suitability regime.
Click here to read the full submission.
