B.C. reveals details of new advisor registration rules

(June 23, 2004) Advisors working for IDA and MFDA firms in B.C. will no longer be required to individually register with the province’s securities regulator, under B.C.’s proposed new securities act. The British Columbia Securities Commission (BCSC) published details of its new rules this week.

The commission is introducing firm-only registration, giving companies the responsibility of hiring representatives suitable for work in the securities industry. Advisors with those firms would be exempt from registration requirements.

“The primary reason for doing this is to emphasize that it is the responsibility of firms [to decide] who they have represent them and that it’s up to firms to supervise the people who represent them,” said BCSC chair Doug Hyndman last week at the IDA’s annual conference in Quebec.

Fees for individual registration would be replaced by a fee paid by the firm, based on the number of representatives.

The act also includes 28 “codes of conduct” for dealers and advisors, replacing many of the detailed rules that currently govern registrants in B.C. The codes cover a wide range of topics, including ethics, dealing with clients, proficiency, suitability and compliance.

“They are focused on what we want to see achieved, in terms of investor protection, rather than how to do it,” Hyndman said, adding that the codes are based on the same fundamentals of the province’s existing legislation, with a few additions, such as raising standards for disclosing conflicts of interest and fees, and requiring advisors to communicate with clients in plain language.

“We’re working with the IDA and the MFDA on how our new requirements would interface with the SRO rules,” Hyndman said.

The new rules will also affect advisors working outside B.C. Those whose clients move to B.C. will be allowed to continue to provide advice to those clients without registering in the province, as long as they follow the rules in their home jurisdiction and do not advertise their services in B.C.

The commission also says it is studying an independent owner-operator arrangement, under which one-person businesses could be registered as restricted dealers. A report is expected early next year.

B.C.’s securities act was passed by the provincial legislature in May and is expected to be proclaimed by November 15. Comments on the proposed rules are due by August 23.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com