Generally, the notice summarizes existing requirements and
guidance relating to entering into and maintaining outsourcing
arrangements, describes the types of business activities that
may and may not be outsourced and sets out IIROC's expectations
concerning due diligence procedures that must be undertaken by
dealers prior to outsourcing business activities.
More specifically, IIROC notes that since current rules require
that certain functions and activities be performed by Approved
Persons, outsourcing is effectively prohibited in respect of most
client-facing activities, such as the assessment of client
information to ensure compliance with "know your
client" obligations, the performance of suitability
assessments and the handling of client complaints by a designated
complaints officer. An exception to this general prohibition in
respect of client-facing activities is the outsourcing of the
performance of investment decision-making in managed accounts,
which is specifically permitted by IIROC's Dealer Member Rules
to be outsourced to an external portfolio manager.
Meanwhile, for those activities that may be outsourced,
IIROC distinguishes between "core" activities
on which IIROC intends to focus its regulatory resources
(which are identified in the notice, and include such activities as
the performance of certain activities that are not required by
IIROC rules to be performed by an employee or agent of a
dealer relating to the firm's account opening, suitability
assessment and client complaint handling processes, the
administration of margin loans, the preparation of client account
statements, and the performance of marketing activities), and
"non-core" activities, which pose less risk to
members and clients (such as office service management, the
procurement of external consultant services and human resources
management activities) .
The guidance also sets out a number of principles for dealers to
consider when contemplating whether to enter into an outsourcing
arrangement, and reminds dealers that registered firms remain
responsible under the NI 31-103CP for ensuring that the
activities are performed properly and in compliance with relevant
we discussed in October 2012, draft guidance was initially
released in 2012, and the final version of the guidance addresses some of the comments received from
stakeholders. IIROC also indicated that it will be
developing a principles-based rule to codify dealers'
outsourcing due diligence obligations and establish specific
requirements to be met when a potential outsourcing arrangement
involves either books and records, or assets of the member
or its clients. As
we recently noted, IIROC indicated in its
recent annual consolidated compliance report that
outsourcing would be one of the regulator's areas of focus for
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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