On July 15, 2021, the Canadian Securities Administrators (CSA) published final amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations that are intended to improve the protection of older and vulnerable clients, with effect as of December 31, 2021. We first described the proposed amendments in our bulletin here.
There are two main components of the amendments:
- Registrants will be required to take reasonable steps to obtain the name and contact information of a trusted contact person from individual clients and written consent for the trusted contact person to be contacted in specified circumstances.
- The creation of a regulatory framework for registrants who place a temporary hold on transactions, withdrawals or transfers in circumstances where the registrant has a reasonable belief that there is financial exploitation of a vulnerable client or where there are concerns about a client’s mental capacity to make decisions involving financial matters.
Registrants that have not already taken measures to enhance the protection of their older and vulnerable clients should ensure that they have taken the following measures by the end of the year:
- Implement written policies and procedures to identify senior and vulnerable clients, collect trusted contact person information and address how such information will be used and describe if and when a temporary hold can be placed.
- Provide relevant employees with training on the new rules and internal policies.
- Revise account opening forms (IMAs, subscription documentation) to collect trusted contact person information and obtain consent to contact such person in the enumerated circumstances.
- Consider how enhanced KYC information from older and vulnerable clients will be collected.
- Consider how trusted contact person information will be kept current (g., through the normal-course KYC information update process).
The CSA clarified that there is no expectation that registrants take reasonable steps to collect trusted contact person information from existing clients as of the effective date of the amendments. Rather, the CSA would expect registrants to take reasonable steps to collect that information from existing clients the first time they update the client’s KYC information after December 31, 2021 (i.e., pursuant to the CFR requirements). However, we encourage registered firms to start revising their policies and procedures now if they have not already done so, as a prudent practice and given existing CSA guidance setting out regulatory expectations regarding engaging with older and vulnerable clients. Many of our clients are revising their documentation for these requirements together with all the changes required by the client-focused reforms, and we can help with both sets of amendments. Please contact us for assistance.
August 31, 2020