Sweep focused on best practices: IDA

The IDA is conducting a compliance sweep of its members, looking into the practices surrounding the sale of asset-backed commercial paper to retail investors. But the self-regulatory body insists it is not an enforcement sweep, as reported in the National Post on Tuesday.

The IDA has been monitoring its members’ exposure to non-bank ABCP since that market seized up in August 2007. It has launched a joint financial and sales compliance sweep focused on the IDA-regulated firms involved in the manufacture and/or distribution of non-bank ABCP.

“The objective of the review is to identify and address areas for systemic improvement,” says Connie Craddock, vice-president, public affairs.

The focus of the sweep is sales compliance, including policies, procedures and processes that the firms have in place. The goal is to identify best practices which may result in member regulation notices.

So far, the IDA has nothing to share, given that its membership includes 214 firms, but it could start to report its findings by early summer.

While the sales compliance review is focused on best practices, the IDA enforcement team has also begun investigating complaints filed by clients, but these investigations are conducted separately.

“There is a compliance sweep, which is being done by the compliance departments,” says Alex Popovic, vice-president, enforcement. “Then there are investigations being done by the enforcement department. They are two separate, completely independent processes.”

Popovic declined to comment on any specifics related to the investigations, which are focused on due diligence and client suitability issues.

“We don’t want to put at risk any investigation or potential prosecution in the future,” he says. “It’s been ongoing for several months now, so you can probably speculate that there have been [investigations launched as a result of the compliance sweep].”

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