IIROC Publishes Consultation Paper on Phase II of its Proficiency Project

The Investment Industry Regulatory Organization of Canada (IIROC) has published for comment a consultation paper[1] detailing competency profiles for Directors, Executives, Ultimate Designated Persons, Chief Compliance Officers and Chief Financial Officers. Comments are due by December 29, 2021.

Proficiency Project

IIROC has undertaken to reformulate its proficiency regime[2] through which a single education services provider will be selected in a procurement process to offer the regulatory courses required for IIROC registration. As part of this project, IIROC is developing competency standards for each of its approval categories. The project is divided into three phases and will:

  • represent a proficiency benchmark allowing IIROC to evaluate course providers,
  • provide education service providers with guidance on course content development, and
  • allow Dealer Members and Approved Persons to better understand the proficiency expectations and assist them in meeting and maintaining their competency.

Phase I started in August 2020 when IIROC published for comment[3] competency profiles for Registered Representatives and Investment Representatives.

Competency Profile Considerations

To inform its approach, IIROC used comparative research and analyzed other securities regulators proficiency models, including the Financial Industry Regulatory Authority (FINRA) and the Financial Conduct Authority (FCA). They have also engaged subject-matter expects and an independent consultant.  

The regulator considered:

  • existing regulatory requirements applicable to each Approved Person category,
  • applicable securities laws and IIROC rules that an Approved Person should know and understand, as well as other regulations or information that an Approved Person should be aware, and
  • its expectation of the application of knowledge needed to determine the necessary behavior and skills.

Each competency profile consists of high-level competencies and sub-competencies. IIROC stated the sub-competencies describe the knowledge (what an Approved Person needs to understand), along with the behaviours and skills (how they should apply the knowledge) for each approval category.

The completion of the competency profiles will offer some welcomed transparency into the registration process at IIROC. There is little information available as to how IIROC or its predecessor first determined the appropriateness of the required proficiencies for approval. This step will put the regulator in line with other securities regulatory bodies that publish and regularly update competency standards or role-specific expectations for registrants.  

Next Steps

In Phase III, IIROC will publish consultation papers for Supervisors, Traders, Portfolio Managers and Associate Portfolio Managers[4]. After all comment periods close IIROC will update all competency profiles and publish the final profiles in advance of the expiration of the Canadian Securities Institutes contract as education provider.

We invite you to contact any of the authors if you have questions regarding the consultation paper and how any issues raised therein may affect your business, including your policies and procedures.

 

[1] IIROC Notice 21-0153, Consultation Paper (Phase II) – Competency Profiles for Directors, Executives, Ultimate Designated Persons, Chief Compliance Officers, and Chief Financial Officers

[2] IIROC Notice 15-0215, Proficiency Assurance: The Next Phase in Proficiency Regulation

[3] IIROC Notice 20-0174, Consultation Paper – Competency Profiles for Registered Representatives and Investment Representatives, Retail and Institutional

[4] IIROC will introduce separate approval categories for Associate Portfolio Managers and Portfolio Managers with the implementation of its Plain Language Rules.

IIROC competency profile proficiency UDP CCO CFO

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