During the Spring Regulatory and Compliance Webinar organized by the Portfolio Management Association of Canada (PMAC) on May 27, a member of the Compliance and Registrant Regulation Branch (Branch) at the Ontario Securities Commission (OSC) updated attendees on the Branch’s programs and what registrants can expect in the coming months. We think that our readers will be interested in the following:
- Compliance audits re-booted:The Branch is re-starting regulatory compliance audits this week. They will be conducted remotely, and firms can expect to have more time (e.g. 45 days as opposed to 30 days) to respond to deficiencies.
- Privacy and cyber security risks arising from the shift to remote work during the pandemic will be an area of regulatory focus in compliance audits. (See our March 2020 and April 2020 bulletin articles, which discussed these risks.) Among other things, if firms haven’t already done so, they should consider arranging for secure document removal from employees’ homes and destruction of files as appropriate.
- Working capital: Registered firms should stay on top of their working capital. If there are potential issues resulting from COVID-19, firms should engage proactively with their regulators.
- Are you registered everywhere you need to be? Branch staff have observed an uptick in registrable activity by registrants in jurisdictions where the firms and relevant individuals are not registered. OSC staff will report such activity to the local regulator.
- Some CCO reports need improvement: Branch staff have observed that some chief compliance officers (CCOs) are not complying with the requirement in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Requirements to provide the registrant’s board of directors with an annual compliance report (CCO Report) or are preparing only a cursory report. Branch staff expect all firms, even one-person firms, to produce comprehensive CCO Reports every year describing how their firms are meeting their securities law obligations.
- Registration of client relationship managers: We expect the OSC to announce very soon a protocol for registering client relationship managers as Associate Advising Representatives subject to certain terms and conditions.
Post-COVID work arrangements: Although the topic did not come up during the PMAC conference, it is our understanding that, to date, registered firms have not been expected to register any remote work locations (such as home offices) that have been set up in response to the authorities’ COVID 19-related restrictions or recommendations for workplaces. As COVID-19 goes on for an extended period, as well as Post-COVID-19, if any of a firm’s individuals make working from home, or another location that isn’t already approved as a branch office, more permanent, the firm should consider whether it needs to register new branch offices.
As the OSC moves toward a “business almost as usual” state, AUM Law stands ready to help registered firms meet their existing obligations and address emerging risks and evolving regulatory expectations. For example, we can conduct focused compliance risk assessments in areas of interest to the regulators and help draft (or improve) your CCO Report. We are also helping firms and individuals with registration applications, and we can help you, too. Please do not hesitate to contact us.
Correction: The paragraph on Post-COVID work arrangements reflects our understanding of expectations for registered firms on this topic. However, in an earlier version of this article (published on May 29), we incorrectly attributed those views to the OSC representative who spoke at the webinar.
June 9, 2020