When a client decides to move firms, the spurned dealer shouldn’t drag its feet, hoping the client will decide to stay. To combat this problem, the Mutual Fund Dealers Association of Canada (MFDA) will be proposing standards for account transfers.
In a follow-up to a consultation paper published last year on the long-standing issue of timely account transfers, the self-regulatory organization said delaying an account transfer request “to allow [a firm] time to engage in client retention efforts” is inconsistent with MFDA rules.
In a bulletin, the MFDA stressed that if a client decides to transfer their account to another dealer, their previous firm is expected to “act diligently and promptly in order to facilitate the transfer in a timely manner.”
While certain changes to Fundserv processes should speed up transfers and future automation efforts will reduce the need for paper documentation, the MFDA said it intends to propose rule changes that “establish transfer timelines and standards for MFDA members acting as receiving or delivering dealers.”
The MFDA also intends to push other regulators and industry groups, such as the Investment Funds Institute of Canada, to consider similar standards for fund managers and others outside the MFDA’s jurisdiction.
Proposed rule changes to establish transfer timelines, coupled with further automation of the transfer process, “could mitigate delays arising from delivering institutions endeavouring to retain clients,” the bulletin noted.
To improve the overall account transfer process, the MFDA said it intends to continue discussing the development of automated processing with industry service providers and to consider mandating transfer timelines.