The BC Securities Commission (BCSC)’s latest Compliance Report Card, released today, reflects the past year’s focus on compliance with rules designed to protect investors and put their interests first.
In 2024, the BCSC conducted a selective review of B.C. firms to determine how well they are following Client Focused Reforms (CFRs), important consumer protection rules that were introduced across Canada in 2021. CFRs include requirements around know-your-client, know-your-product, and suitability.
“While we recognize that many firms have made significant efforts to adapt to the new rules, the report card shows that some firms still have more to do,” said Peter Brady, the BCSC’s Executive Director. “We expect registered firms to uphold the standards of conduct set out in Canadian securities regulations, including those related to Client Focused Reforms.”
The BCSC conducted 19 compliance reviews and found 130 deficiencies, with an average of 6.84 deficiencies per review. Of the registrants reviewed, know-your-client and suitability deficiencies were most common, followed by deficiencies in policies and procedures, and conflicts of interest.
The reviews also found an increasing number of deficiencies in annual financial statement submissions. Failure to deliver this information within 90 days of their annual year-end is often an indicator of other compliance issues that can result in a broader review of a firm.
Some deficiencies were significant failures of compliance that led the BCSC to impose terms and conditions on registration, such as requiring the hiring of a compliance monitor to prevent new clients from being onboarded until the failures have been corrected.
The BCSC took compliance action against two dealer firms, one of which was suspended, and the other voluntarily terminated its registration. In addition, four firms with systemic failures or cultures of compliance that fell significantly short of expectations were referred to the BCSC’s Enforcement Division for further investigation.
In 2024, the BCSC reached settlements with several firms and individuals, including those who failed to respond to conflicts of interest, as well as those who fell short of KYC requirements.
The BCSC is the principal regulator for about 174 adviser and dealer firms. It takes a risk-based approach to examining firms.
