The Canadian Investment Regulatory Organization (CIRO) published a position paper on January 25, analyzing three different policy options “for levelling the approved persons compensation playing field.” The regulator also discusses the option it prefers currently and requests public comment on which option it should pursue.
“Currently, approved persons governed by the mutual fund dealer rules of the Canadian Investment Regulatory Organization are permitted to utilize an approach where the compensation they have earned through a sponsoring dealer member is paid to a party other than themselves. Approved persons governed by the CIRO investment dealer and partially consolidated rules, are not permitted to use such an approach,” they state.
Comments on the consultation paper are due back to the regulator by March 25, 2024.
“CIRO has committed to developing a consistent approach to approved person compensation as a priority policy issue,” they continue in the paper, Policy options for leveling the advisor compensation playing field.
In the paper, CIRO says the regulator’s preliminary position and plan is to pursue an incorporated approved persons approach. It also looks at a registered corporation approach along with interim measures. The paper looks at the benefits and concerns associated with each approach, rule and legislation amendments required to adopt changes and the approval requirements that would need to be adopted and met by applicants.
“CIRO intends to provide more efficient and consistent regulation through pursuing rule amendments which improve the consistency of regulatory requirements applicable to investment dealers and mutual fund dealers and their approved persons,” the paper states. “A current area of rule inconsistency is the approaches available to compensating approved persons.”
They conclude saying should CIRO and the Canadian Securities Administrators (CSA) proceed with either approach, it would recommend a two-year transition period.