When is an “outside activity” deemed important enough to disclose it? While it may be easily understandable to the Mutual Fund Dealers Association (MFDA), the regulators have drafted a clearer set of definitions to make sure advisors know as well. But the new proposal did not sit well with some advisors attending the Independent Financial Brokers of Canada (IFB) meeting in Toronto on Tuesday.

Marc Guerin, director of Member Education at the MFDA, told the advisors that discussion has been going on for four years on how to update and shed light on regulations as to what “outside” activities must be disclosed to clients and dealers.

The proposed regulations do not involve “business” activities in particular, but can be an outside activity during which an advisor may receive direct or indirect payment or compensation, such as an officer or director position of a board.

As well, those in a “position of influence,” especially religious leaders, health-care professionals or military officers, will also likely have to make the disclosure.

One advisor in particular was upset that he has to disclose more information to regulators and clients than he does for an employer – a statement that was cheered on by others attending the seminar.

But Guerin said all regulators have had complaints from clients dealing with theft, fraud, loss of money or loss of livelihood, and regulations must be put in place to ensure advisors understand the requirements.

“It’s not easy to run a fraud through an IIROC dealer, it’s not easy to run a fraud through an MFDA dealer,” he said. “It is infinitely easier to run a fraud through an unregulated entity, through multiple entities, to hide books and records…. So why is it necessary [for this regulation?] Because when money goes missing, it’s almost always being hidden by another set of books where there is no oversight and supervision.  Unfortunately when there is a requirement, you can’t pick or choose, so everyone else gets caught in the loop.”

Guerin said the proposed regulations will include certain scenarios to help make the definitions of what not to do clearer for all advisors.