Institute says dealers should be exempt from draft regulation

The Conseil des fonds d’investissement du Québec (CFIQ), the Quebec arm of the Investment Funds Institute of Canada (IFIC), has responded to the Autorité des marchés financiers (AMF) consultation on draft regulation in Quebec related to complaint handling and dispute resolution.

In the submission to the AMF, the CFIQ says registered dealers in Quebec should be exempt from the Regulation Respecting Complaint Processing and Dispute Resolution in the Financial Sector, and instead be subject to the rules set out by the New Self-Regulatory Organization of Canada (New SRO).

“This harmonization across Canada will help reduce complexity and redundancies,” they write.

The draft regulation published in December 2022 would cause regulatory burden for dealers practicing in multiple jurisdictions, including Quebec, they add.

“CFIQ strongly recommends that the securities industry, specifically mutual fund dealers, investment dealers and dual-registered dealers be exempt from the regulation. Instead we think dealers should be subject to the rules of the new SRO for complaint handling and dispute resolution,” they add. “We strongly recommend the AMF maintain the regulatory status quo for handling complaints until the New SRO rules are established and implemented.” 

They continue, saying the implementation of a new regulation for Quebec dealers alone is not consistent with the strategic goals put in place by the Canadian Securities Administrators (CSA), of which the AMF is a co-signatory. “We believe that the disharmonization of complaint handling that the regulation may create with the rest of Canada and within certain dealers, will cause confusion for clients, especially if the complaint handling time differs in Quebec.” 

For instance, the submission specifically calls out Quebec’s approach calling for a 60-day response period. “The current standard in securities is a 90-day response period. Having a shorter time for Quebec would encourage dealers working in Quebec and the rest of Canada to prioritize Quebec complaint files, thus introducing possible unequal prioritization of rules. In addition, this would create operational complexity.” 

The CFIQ also states that it would be unreasonable for dealers to comply with Quebec regulations first before transitioning over to the New SRO’s rules.

“There is no valid justification for disharmonizing the dealer regulations,” they write. “The New SRO is well positioned to implement robust harmonized standards for complaint handling and dispute resolution.”