News Releases
Canadian Securities Regulators Stress the Importance of Suitability Requirements for Dealers and Advisers
Sep 02, 2009
The Canadian Securities Administrators (CSA) today published CSA Staff Notice 33-315 Suitability Obligation and Know Your Product that reminds dealers and advisers of their duty to satisfy their suitability obligations to clients, which includes the requirement to fully understand the products they recommend to clients.
In order to meet their obligation to their clients, anyone selling or advising in securities must determine whether a purchase or sale of a security recommended to an investor is suitable for the investor. Dealers and advisers have an obligation to understand the general investment needs and objectives of their client ( “know your client”), as well as the attributes and associated risks of the products they are recommending to clients (referred to as “know your product”).
“Both individual representatives and firms owe a duty to their clients to ensure the suitability of investment products and we expect dealers and advisers to carefully consider product attributes and the investment objectives of their client before recommending any product,” said Jean St-Gelais, CSA Chair and President & Chief Executive Officer of the Autorité des marchés financiers. “Any registrant that does not meet these obligations is in breach of securities law.”
Canadian regulators require that dealing and advising representatives understand the structure and features of each investment product they recommend, including costs, risks and financial position and reputation of the issuer and other parties involved in key aspects of the product. They should explain the risks of products they are recommending to clients and must determine the suitability of each transaction for a client. Additionally, firms should have a product review process in place that includes procedures for identifying, reviewing and approving (or rejecting) new products and for monitoring existing products for significant changes to those products.
CSA Staff Notice 33-315 Suitability Obligation and Know Your Product is available on various CSA members' websites.
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
For more information:
| Laurie Gillett Ontario Securities Commission 416-595-8913 |
Sylvain Théberge Autorité des marchés financiers 514-940-2176 |
| Mark Dickey Alberta Securities Commission 403-297-4481 |
Ken Gracey British Columbia Securities Commission 604-899-6577 |
| Ainsley Cunningham Manitoba Securities Commission 204-945-4733 |
Wendy Connors-Beckett New Brunswick Securities Commission 506-643-7745 |
| Natalie MacLellan Nova Scotia Securities Commission 902-424-8586 |
Barbara Shourounis Saskatchewan Financial Services Commission 306-787-5842 |
| Janice Callbeck PEI Securities Office Office of the Attorney General 902-368-6288 |
Doug Connolly Financial Services Regulation Div. Newfoundland and Labrador 709-729-2594 |
| Fred Pretorius Yukon Securities Registry 867-667-5225 |
Louis Arki Nunavut Securities Office 867-975-6587 |
| Donn MacDougall Northwest Territories Securities Office 867-920-8984 |