Make compliance work for you, says consultant

suitability suitability unregistered activity misrepresentation/omission regarding investment high-pressure sales practices unauthorized trading Most of these are easily within the ethical advisor’s control, particularly unregistered activity, misrepresentation and unauthorized trading. But it is far easier for an advisor to honestly slip up regarding suitability. Murray reminds advisors that knowing clients is an ongoing process, not simply […]

By Steven Lamb | June 27, 2005 | Last updated on June 27, 2005
2 min read
  • suitability
  • unregistered activity
  • misrepresentation/omission regarding investment
  • high-pressure sales practices
  • unauthorized trading

    Most of these are easily within the ethical advisor’s control, particularly unregistered activity, misrepresentation and unauthorized trading. But it is far easier for an advisor to honestly slip up regarding suitability.

    Murray reminds advisors that knowing clients is an ongoing process, not simply a form they fill out at the time of engagement. Suitability of investments for any given client changes over time. If the client expresses interest in an unsuitable investment, it is the advisor’s job to advise against it — and it is just as important to document that advice.

    But the registrant has a dual role when it comes to protection. While their client’s interest is paramount, the advisor has an obligation to refuse to act for persons who would cause injury to the integrity of the markets and to avoid any activity that might bring the industry into disrepute.

    She points out that there is a significant difference between a regulatory audit and an investigation. Regulators realize there can be differences of opinion on issues they find, Murray says, advising registrants to remain calm and reasonable in arguing their perspective.

    As a former manager of investigations with the British Columbia Securities Commission, she says regulators are aware that 95% of registrants want to comply and honestly try to do so.

    “Regulators have limited resources,” she said. “Help them focus on the 5% and not on you.”

    Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

    Steven Lamb

    • suitability
    • unregistered activity
    • misrepresentation/omission regarding investment
    • high-pressure sales practices
    • unauthorized trading

    Most of these are easily within the ethical advisor’s control, particularly unregistered activity, misrepresentation and unauthorized trading. But it is far easier for an advisor to honestly slip up regarding suitability.

    Murray reminds advisors that knowing clients is an ongoing process, not simply a form they fill out at the time of engagement. Suitability of investments for any given client changes over time. If the client expresses interest in an unsuitable investment, it is the advisor’s job to advise against it — and it is just as important to document that advice.

    But the registrant has a dual role when it comes to protection. While their client’s interest is paramount, the advisor has an obligation to refuse to act for persons who would cause injury to the integrity of the markets and to avoid any activity that might bring the industry into disrepute.

    She points out that there is a significant difference between a regulatory audit and an investigation. Regulators realize there can be differences of opinion on issues they find, Murray says, advising registrants to remain calm and reasonable in arguing their perspective.

    As a former manager of investigations with the British Columbia Securities Commission, she says regulators are aware that 95% of registrants want to comply and honestly try to do so.

    “Regulators have limited resources,” she said. “Help them focus on the 5% and not on you.”

    Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com