Client Focused Reforms.

Client Focused Reforms are here. And there is lots to know.

As an educational institution, we have been speaking with many clients, students, and thought leaders in the financial services industry to understand the importance of this change, and the overall consensus is that it is a little daunting. So it’s our mission to simplify what you need to know for IIROC, MFDA, Portfolio Managers and Exempt Market Dealers.

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About CFR | Overview | CFR Tools & Resources | Compliance Training

About Client Focused Reforms.

The interest of the client always comes first

The Client Focused Reforms amendments require registered firms and registrants to better align their interests with those of their clients.

Conflicts of Interest (COI)
Know Your Client (KYC)
Know Your Product (KYP)
Suitability Determination (SD)
Relationship Disclosure Information (RDI)

Client Focused Reforms Overview.

The Canadian Securities Administrators (CSA) published Reforms to Enhance the Client-Registrant Relationship (Client Focused Reforms) in October 2019 with the purpose of putting an investor protection initiative in place and improving client-registrant relations. These amendments were made to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. The Client Focused Reforms (CFR) amendments require registrants to better align their interests with those of their clients, ensuring that the interest of the client always comes first.
The new rules require registered firms and registrants to perform the following:
Conflicts of Interest: Addressing material conflicts of interest in the best interest of the client. This happens when the interests of the client and advisor are not aligned. A conflict can be compensation-related, product-related, on fair allocation, referral arrangements, or lending or borrowing money from a client or purchasing or selling assets directly from a client.
Know Your Client (KYC): Tailoring decisions based on the client’s needs and circumstances and keeping information current. This includes personal circumstances (not limited to financial circumstances), investment knowledge, risk profile, and investment time horizon.
Know Your Product (KYP): Registered firms and registrants must perform product due diligence for all securities offered to clients. This would include performing a comparison between securities made available to clients and other similar securities in the market, prescriptive requirements in terms of securities transferred, maintaining an offering of securities and services that are consistent with the firm.
Suitability Determination: Registered firms and registrants must make recommendations that are in the best interest of the client. This is based on numerous factors, such as Know Your Client (KYC) information, the registrant’s assessment of the security consistent with Know Your Product (KYP) information, the effect that the action has on the client’s account, and the potential and actual impact of costs on the client’s return on investment (ROI).
Relationship Disclosure Information (RDI): Registered firms and registrants must clearly state to clients what they should expect from them. This information includes the type of account the client has, a thorough description of the client’s assets, a general description of the products or services a firm offers, and any limitations on those offerings.
The amendments require registered firms to provide mandatory CFR training for their registered individuals and keep records of all training.
Listed below are links to the SRO’s most recent CFR updates:

Canadian Securities Administrators (CSA)
Client Focused Reforms Resources

Investment Industry Regulatory Organization Of Canada (IIROC)
Know-your-client and suitability determination for retail clients (GN-3400-21-004)
Product Due Diligence and Know-Your-Product (GN-3300-21-001)
IIROC Rules
Mutual Funds Dealers Association Of Canada (MFDA)
CFR Conforming Amendments to MFDA Regulatory Instruments Now in Effect (Bulletin #0894-P)
Client Focused Reforms (CFR) - Implementation of Requirements Related to Conflicts of Interest (Bulletin #0864-P)
MFDA Rules
Provincial and Territorial Regulators securities commission websites:
Alberta - Alberta Securities Commission
British Columbia - British Columbia Securities Commission
Manitoba - Manitoba Securities Commission
Newfoundland and Labrador - Financial Services Regulation Division - Digital Government and Service NL
New Brunswick - Financial and Consumer Services Commission
Northwest Territories - Office of the Superintendent of Securities
Nova Scotia - Nova Scotia Securities Commission
Nunavut - Nunavut Securities Commission
Ontario - Ontario Securities Commission
Prince Edward Island - PEI Office of the Superintendent of Securities Office
Quebéc - Autorité des Marchés Financiers
Saskatchewan - Financial and Consumer Affairs Authority of Saskatchewan
Yukon - Office of the Yukon Superintendent of Securities

Education Resources.

There is a lot to know about Client Focused Reforms, so we have created educational assets to help simplify your learning.

Access CFR Resources

Client Focused Reforms Training Series.

Learnedly's CFR compliance training satisfies the new training requirements for licensed individuals under the Reforms to Enhance the Client-Registrant Relationship (Client Focused Reforms). The program is a series of short videos, organized into four parts, covering all of the CFR training topics.

For dealer firms, Learnedly handles the registration process, and provides full reporting to demonstrate compliance with new training obligations.

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The first rules around conflicts of interest and enhanced client disclosures with respect to conflicts of interest came into effect on June 30, 2021. The remainder of the policy and rule changes came into effect on December 31, 2021.

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