MFDA and IIROC, the self-regulatory organizations for mutual fund and investment dealers, have often struggled to collect fines from banned or former reps who no longer work as advisors.
But incrementally, the groups have been getting legal authority from individual provinces to use the provincial courts to collect fines from former dealers—significantly beefing up their enforcement powers. Right now, MFDA and IIROC have those powers in Alberta, P.E.I., Quebec and Ontario as of May 17.
So, how have the court powers been working for the groups so far? MFDA says its fine collection rate in Alberta has been nearly twice the national rate.
Read: No shelter in B.C. for banned advisors
In Alberta and P.E.I., the MFDA “pursues fine collection where there is a reasonable possibility of recovery. However, in cases where there is a lack of income or assets, this is often not a viable option,” says Ian Strulovitch, a spokesperson for MFDA.
From January 2014 to December 2016, MFDA has ordered fines worth $1.31 million in Alberta and collected $175,750, for a collection rate of 13.4%, Strulovitch says. (In P.E.I, he says, there are no outstanding penalties, and activity happening solely in Quebec is enforced by Chambre de la sécurité financière in Quebec.)
Nationally, he says, MFDA has ordered fines totaling $34.95 million over the same period and collected $2.51 million, for a collection rate of 7.2%.
The group says it is looking forward to using the new Ontario law for fine collections.
“The MFDA will engage in collection efforts in Ontario if and when such legislation comes into force,” Strulovitch says. “A significant majority of MFDA uncollected fines are in Ontario.”
Read: IIROC shouldn’t have court authority to collect fines: lawyer
IIROC initially did not provide detailed numbers. Asked by email for a provincial breakdown of fines collected versus fines sought, it said it only tracks collection rates on a “global basis for all disciplinary decisions regardless of whether judgments are registered.” The group said its unpaid fines, nationally, total nearly $32 million and date back to 2008. On May 25, IIROC explained that its national collection rate for 2016 was 8.3%.
Read: Ontario and N.B. have highest rates of outstanding IIROC fines
Update, May 25: IIROC has provided the following breakdown of fines by province, current as of December 31, 2016.
Last year, IIROC provided Advisor.ca with data showing that Ontario had $18 million in fines outstanding, B.C. had $3.9 million outstanding and Quebec had $3.4 million outstanding as of June 30, 2016.