The Ontario Securities Commission (OCS) has recently published a report detailing the common compliance deficiencies encountered over the most recent fiscal year.
The report, entitled Annual Summary Report for Dealers, Advisors and Investment Fund Managers, revealed that there was an increase in regulatory actions in fiscal year 2018. In fact, the regulator's Compliance and Registrant Regulation (CRR) branch conducted 136 actions this year, higher than 2017's 126 and 2016's 87. Comprising most actions are registration denials (63) and impositions of terms and conditions (56).
OSC said the CRR is continually improving its information tools to further help in identifying high-risk registrants and applicants for registration.
"This has resulted in an increase in regulatory actions over the past four years," the report said.
CRR director Debra Foubert said during the course of producing the report, the group continues to focus on evaluating the effectiveness of a registrant's compliance system.
"We continue to focus our reviews on evaluating the effectiveness of firms’ compliance systems, and will take further regulatory action when we see significant deficiencies," she said.
Foubert stressed that Part 11 of National Instrument 31-103 and the accompanying guidance provides the framework for establishing an effective compliance system.
"To meet this obligation, registrants should continually monitor, test and revise their compliance system to keep up-to-date with the evolution of their business practices, products and risks," she said.
Meanwhile, the report also outlines the areas that the OSC intends to cover in its compliance reviews over the coming fiscal year. Key areas of focus will include compensation practices and mutual fund sales practices, as well as reviews of initial registration applications and proposed compliance systems for firms seeking registration.
To view the report, click this link.