IIROC Proposed Amendments respecting Reporting, Internal Investigation and Client Complaint Requirements

April 14, 2022

Download PDF:

IIROC Internal Investigations and Client Complaints

Letter Summary:

IIROC has proposed changes to a variety of rules relating to client complaint handling processes, which are intended to clarify regulatory expectations and reduce duplicative reporting requirements. While the current ComSet reporting requirements are prescriptive, the amendments introduce a definition of “serious misconduct” that is more principles-based and that would require dealers to report on a specific list of activities (such as theft, material breaches of client personal information), but also other actions where there is either a reasonable risk of material harm to clients or the capital markets, or material non-compliance with IIROC requirements, securities laws or any other applicable laws. The amendments would focus the reporting on matters IIROC staff are most concerned about. Dealers would be required to conduct internal investigations and report to IIROC if they become aware that the dealer, an Approved Person or an employee may have engaged in serious misconduct, within the prescribed time frames. The amendments also codify some best practices with respect to client compliant handling procedures including removing the distinction between verbal and written complaints, setting time limits for internal dispute resolution, prohibiting the use of the term “ombudsman” for internal dispute resolution services, and requiring dealers to document and respond to each client complaint in a manner that a reasonable investor considers effective, fair and expeditious. In addition, IIROC is republishing amendments first published in 2019 to Rule 9500, which eliminates the restriction currently placed on OBSI from sharing information with IIROC staff.

Overview of the Council’s Comments:

The Council believes the Proposed Amendments provide a rigorous analysis of the existing reporting requirements and appropriately set out changes to eliminate duplicate reporting while focusing on potentially harmful matters.

Our key comments are summarized below: