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IIROC Consultation Paper – Competency Profiles for Registered Representatives and Investment Representatives Retail and Institutional
Letter Summary:
The consultation is the first phase in a multi-year project to set out competency profiles for all of IIROC’s registration categories, which are sets of knowledge, behaviours and skills that an individual must have to perform effectively in their role. The purpose of the competency profiles is to provide a benchmark to evaluate course providers, provide educational providers with guidance on course content and allow dealers to better understand expectations. For retail registered representatives, IIROC proposes seven categories of high-level competencies associated with relationship skills, regulatory skills and technical skills and more than 30 sub-competencies, some of which depend on the products a person is approved to trade. Institutional registered representatives have different high-level competencies associated with regulatory and technical skills and over 20 sub-competencies. IIROC is not proposing separate profiles for investment representatives but expect registered representatives to understand and apply the competencies and investment representatives to understand, apply or provide support, as applicable.
Overview of the Council’s Comments:
The CAC supports the progressive proficiency framework, as we believe it focuses on minimum standards that are responsive to innovation, build professionalism and ensure skills development while encouraging the delivery of high-quality and ethically centered investment advice, regardless of the registration category. We understand that the Consultation Paper is the first phase of a multi-year project to develop competency profiles across IIROC’s registration categories, with this phase focusing on retail registered representatives (“RR”) and investment representatives (“IR”). We agree with a number of the stated knowledge and skills competencies for RRs and IRs and have made a few specific additional suggestions below. In addition to regulatory, relationship and technical skills, there are also personal skills that are applicable (and indeed important in our view) to all registration categories, including such items as collaboration, communication, curiosity and leadership, which could be considered for part of IIROC’s relationship competency framework as well. In general, the knowledge competencies required for RRs and IRs for both KYC and KYP should align prospectively with those expected of dealers under the client-focused reforms, and we believe additional updating of the profiles is necessary in these areas. We believe that representatives will also need to understand general portfolio management concepts relating to how portfolios are constructed and an awareness of the suitability of a particular investment for an investor’s broader portfolio, as well as investment performance disclosure and measurement and specific skills and behaviours relating to educating clients on the importance of portfolio diversification. The recognizing capacity concerns skill set should be complemented by a knowledge sub-competency which ensures RRs and IRs have information on not only how to recognize potential capacity concerns but also help them ask their clients targeted questions and provide useful examples of fraud or exploitation. Given the sweeping changes being made to NI 31-103 with respect to conflicts of interest, we believe that additional consideration and expansion of this category is necessary. There should also be a technical skill requirement involving conflicts and ethics that discusses considerations for vulnerable clients, ethical decision making, conflict management and critical evaluation. We believe there should be a specific knowledge requirement for familiarity with basic ESG terminology. We also note the potential for investor confusion that arises from discretionary portfolio management provided by an IIROC registrant and believe that regulatory expectations and application should be harmonized between the IIROC and CSA platforms in this area going forward as a separate project.