On October 10, the Investment Industry Regulatory Organization of Canada (IIROC) published a guidance note (Notice) describing the kinds of limitation of liability or exclusionary clauses in retail account agreements that IIROC believes are inconsistent with member firms’ regulatory obligations. Although the Notice is directed toward IIROC members, we believe that the guidance is informative and a good refresher for other registered firms since they are subject to requirements in securities legislation to deal fairly, honestly and in good faith with clients.

Among other things, the Notice emphasizes that dealers should not attempt to shift their responsibilities to clients, limit their liability to clients or attempt to protect the firm or its registered individuals at the expense of clients. The Notice also indicates that firms should not limit their liability for technology systems malfunctions within their control.