Regulators That Oversee Canada’s Financial Advisors Combine Into New Entity

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Canada’s securities regulators plan to merge two industry groups that oversee financial advisers into a single new organization.

The Investment Industry Regulatory Organization of Canada (IIROC), which regulates investment advisory firms that sell a broad range of securities, and the Mutual Fund Dealers Association of Canada (MFDA), which oversees firms that sell funds, will merge into one new organization.

Both IIROC and MFDA levy fines and other penalties on individual financial advisers who break the rules. The merger of the two regulators is aimed at addressing years of complaints about the overlapping roles and high costs of the two groups.

IIROC oversees about 175 firms, including full-service investment dealers such as BMO Nesbitt Burns and RBC Dominion Securities, while the MFDA supervises about 90 mutual fund dealers, such as CIBC Securities and National Bank Investments.

Currently, some financial firms are forced to be members of both agencies because their employees hold different licenses for selling investment products.

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The merger of the regulatory bodies is being overseen by the Canadian Securities Administrators (CSA), an umbrella group of Canada’s provincial securities watchdogs.

In late 2019, the CSA began studying the existing framework. It created a working committee to determine the structure of the new organization and oversee the integration of the two groups.

The combination is aimed at saving costs for investment dealers while aligning and streamlining their processes, the CSA said. A majority of the as yet unnamed new organization’s board members and its chairperson will be independent, and the group will be required to solicit CSA comment on its priorities, business plan and budget.

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