Will there be a CRM3?

By Dean DiSpalatro | May 23, 2014 | Last updated on May 23, 2014
2 min read

CSA’s comments on CRM2 have a prominent securities lawyer wondering if regulators are contemplating CRM3.

People have been asking CSA whether CRM2 applies to all investment products, or only securities.

CSA has replied that it only applies to securities. But, it recommends registrants use CRM2 standards “in respect of all [clients’] investments. This will enable investors to better understand the relative costs of different investments and their performance.”

Read: CSA issues FAQ on CRM2

Prema Thiele, a partner at Borden Ladner Gervais (BLG) in Toronto, wonders if regulators may release CRM3 to apply to non-securities investments.

“Certain IIROC staff…have indicated to me they feel that limiting disclosure and reporting to securities only [isn’t] practical, and in fact, they would see this [as] caus[ing] client service issues. So I think it’s very important in your organizations to be discussing how these disclosure and cost obligations are going to be implemented across product lines.”

Regarding CRM2, she says firms should see it as an opportunity to help restore confidence in the markets and financial services.

Rebecca Cowdery, also a partner at BLG, told Advisor’s Edge Report in April she would welcome steps to address the bifurcation of regulation between securities and non-securities products.

Read: Compliance roundup – April 2014

“I’d like to see regulators take more initiative to ensure there’s more consistency across the industry. If we think as a society that [CRM2] is the right way to go vis-à-vis the client, shouldn’t we be working harder to ensure that clients get consistent experiences no matter what products they invest in?”

She adds that dealers offering securities and non-securities products, as well as firms that deal strictly in the latter, will be industry leaders if they voluntarily meet CRM2 standards for non-securities reporting.

Also read:

CRM2 requirements for 2014

CRM2 will challenge you

Firms need help handling CRM2 reforms, says IIAC

Dean DiSpalatro