On December 15, 2016, the Canadian Securities Administrators (CSA) published CSA Staff Notice 33-318 Review of Practices Firms Use to Compensate and Provide Incentives to their Representatives (Notice) summarizing the results of a survey conducted in 2014 that gathered information relating to compensation arrangements and incentive practices that firms use to motivate their representatives (Survey).
The Survey was conducted as part of a larger framework of proposed reforms to enhance the client-registrant relationship, as set out in the CSA Consultation Paper 33-404 Proposals to Enhance the Obligations of Advisers, Dealers, and Representatives toward their Clients, published on April 28, 2016 (Consultation Paper). The Consultation Paper is part of the CSA’s initiative towards improving the relationship between clients and their advisers, dealers and representatives.
The Survey asked adviser and dealer firms to identify the compensation practices used to compensate their representatives. The Survey was focused on the incentive practices used for retail representatives who fell under the oversight of the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC), as well as representatives with portfolio managers or exempt market dealers working with high net worth clients.