The Autorité des marchés financiers (“AMF”), in seeking to bolster its role as a local regulator and better support the industry, especially regarding compliance issues, will collect additional data to better understand “the reality and needs of firms, independent partnerships and independent representatives.”
On November 15, 2017, the AMF announced that it would collect additional information concerning registrants’ practices and their business relationships with different industry stakeholders. The regulator will ask for further information in the following documents that are required to be submitted to the AMF:
- (1) Renewal of Certificate/Maintenance of Registration – the new questions are aimed at, among other things, disclosure of business relationships with insurers, other registrants and client referral agents; conduct of paid activities other than those provided for under its registration; procedures regarding uncertified employees (e.g. administrative staff); use of compliance audit software; business continuity plans; different types of fees charged to clients; and clients outside Quebec.
- (2) Declaration of Officers and Directors or Partners Schedule – the new questions are aimed at obtaining details about officers and directors of registrants which may go to the individual’s ability to adequately fulfill their role as an officer or director.
- (3) Disclosure of registrants’ business relationships – a registrant must disclose the names of the natural persons and legal persons with which the registrant’s business (independent representative, firm or independent partnership) has a relationship as part of its activities governed by the Act respecting the distribution of financial products and services.
The changes are detailed in AMF companion documents, which are intended to assist registrants in answering the regulator’s questions and in identifying the types of business relationships that need to be disclosed.
In addition, the AMF announced that it will release a governance and compliance guide in early 2018, which will explain the regulatory framework and provide recommended best practices for registrants.
The AMF announcement comes on the heels of a flurry of regulatory guidance and proposed initiatives relating to obligations of registered dealers and advisors over the past year by numerous regulators, including the Ontario Securities Commission, the Investment Industry Regulatory Organization of Canada, and the Mutual Fund Dealers Association (especially in the area of managing conflicts of interest, as we have previous discussed). Hopefully, the AMF’s pending governance and compliance guide will be seen by the industry as a welcome opportunity to receive greater clarity for registrants, rather than imposing further obligations on an industry that already sees itself overburdened by regulation.