The Canadian Investment Regulatory Organization (CIRO) says a top complaint the organization hears consistently from investors and member firms alike is that account transfers take too long. Outdated processes, inconsistent standards and fragmented communication between firms causes delays that disrupt financial planning and lead to adverse consequences for investors.
“Modernizing account transfers will require a multi-faceted approach that includes the automation of systems, standardization of transfer procedures and harmonization of regulations,” CIRO states in its announcement about the publication of a new whitepaper and proposed rules addressing account transfers.
Entitled Enhancing Timely and Efficient Account Transfers in Canada: Phase 1 – Defining the problem and laying the groundwork for change, the phase one whitepaper (the regulator envisions the work being moved forward in two phases) examines the root causes of account transfer issues and presents solutions, including rule amendments and operational recommendations.
They explain that despite technological advancements, manual processes and fragmented systems continue to hinder efficient transfers. The proposed technology solution, they say, would eliminate outdated practices including faxes, physical signatures and cheques.
“Also released today are proposed rule amendments which, if adopted, will require all CIRO dealer members to use automated systems for eligible transfers and clarify that electronic communications must be used where available. They also stipulate the timeline for the receiving dealer to inform the client of transfer impediments (two clearing days) and set a standard settlement period of 10 clearing days for account transfers,” they write. CIRO says it considered the adoption of a principles-based account transfer rule but decided a prescriptive rule approach was needed.
For an industry-wide technology solution
The whitepaper also discusses the work underway and the work needed to create an industry-wide technology solution. CIRO, in its call for comments, also invited proposals from interested firms seeking to develop the technology solution. Phase two of the white paper, expected in 2026, will provide updates on that progress, along with recommended implementation strategies.
“This whitepaper is focused on the operational aspects of account transfers, specifically the systems and processes that support them. It does not cover matters related to firm or advisor conduct in situations where advisors move between firms,” the paper states.
Product related issues, for example, include that some products require re-registration, specialized and registered accounts involve additional paperwork and proprietary products often cannot be transferred in-kind. They also note that infrequent and unavailable valuations complicate transfer timelines. The transfer of a guaranteed investment certificate mid-term, they note, can take anywhere from six to eight weeks.
Segregated funds are included in the list of product-related issues CIRO highlights, noting that not all segregated funds are transferable between firms. (Receiving financial institutions must have a selling agreement with the carrier offering the fund.) “Additionally, re-registration at the insurance company level introduces delays and increases the burden on both firms and clients. Many segregated fund transfers are handled manually, leading to errors, inconsistencies and delays.”
Similarly they say the need to re-register investment funds at the fund company level and inconsistent valuation schedules often cause delays. The report also looks at proprietary products, exempt products, physical certificates, delisted securities, managed accounts, locked-in plans and the first home savings account (FHSA).
“Urgent need” for modernization
The paper notes that quantifying the issue – getting hard data on transfer volumes and timelines – “proved to be extremely challenging due to the lack of a unified repository or tracking system or standardized metrics. A significant number of transfers are also conducted manually and tracked via email, making it nearly impossible to compile reliable data.”
The organization’s recommendations include a push for automation, consistency and standardization of rules and operational standards, accountability (currently there is no mandated period of time deemed acceptable in transferring accounts) and collaboration on the development of centralized tools.
“The account transfer process in Canada is in urgent need of modernization,” they conclude. Comments on the white paper and the proposed regulatory changes, in writing, should be delivered to CIRO and the Canadian Securities Administrators (CSA) by October 8, 2025.
