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IIROC Guidance re Business Titles and Designations

IIROC has issued a Guidance Note to suggest best practices that Dealer Members may adopt to help ensure that firms are able to properly supervise the business titles and financial designations being used by the licensed representatives when dealing with consumers.  Individuals are not to hold out in a way that deceives or misleads a client or other person as to the IIORC approval they hold, their proficiency or qualifications in order to comply with the obligation to deal fairly, honestly and in good faith with clients”.

Firms are to have policies and procedures which promote greater transparency for consumers, particularly for those who are vulnerable and less sophisticated. Business titles must take into consideration (i) the role and function that the individual is approved by IIROC to undertake; (ii) the services and/or products they can sell or advice on; (iii) the qualifications of the individual (including experience and education) and (iv) the actual role, function and office held by the individual. Business titles should be coupled with public disclosure and a plain language explanation of the individual’s IIORC approval category, corresponding proficiencies and that IIROC is the licensing body.

When approving the use of a financial designation, the firm is to consider whether the designation has (i) a rigorous curriculum and examination process (type and length of exam); (ii) experience requirements; (iii) an emphasis on ethics; (iv) a continuing education requirement; (v) a method for determining the individual’s current status regarding the designation; (vi) a public compliant and disciplinary process; and/or (vii) been issued by a reputable or accredited organization.

FAIR Canada believes the overarching problem with titles and designations is that Approved Persons at IIROC are allowed to hold themselves out as “advisors” when there is no statutory obligation to act in the client’s best interest and this is inherently misleading to consumers. The guidance is helpful in that it should prevent IIROC registrants from holding out as having a specialization when, in fact, they do not or in holding out as having a financial designation that, in fact, is of little worth. However, non-IIROC registrants are not subject to the Guidance, and it is still left up to the firm as to determine what designations meet the appropriate level of rigour rather than such standards being set by regulators.

April 28, 2014