The Investment Industry Regulatory Organization of Canada (IIROC) recently published for comment proposed amendments (Proposed Amendments) to its continuous education rules (CE Rules). The Proposed Amendments would recognize more foreign courses for CE credit, but also tighten the rules for former Approved Persons and dealer member firms (Firms) that are late in reporting compliance with CE requirements.
The current CE Rules require registered and approved individuals (Approved Persons) to complete a 10-hour Compliance course and, depending on their approval category, an additional 20-hour Professional Development course. Each CE requirement may be met by taking one course, or a series of eligible courses.
Approved Person must complete the applicable course(s) once every two years. Approved Persons inform their Firm when they complete a course and the Firm reports to IIROC on their behalf. If an Approved Person fails to complete their CE requirements by the end of a two-year CE program cycle, they are automatically suspended and their firm is assessed a one-time $2,500 fine. The current CE program cycle started January 1, 2018 and will end on December 31, 2019.
The Proposed Amendments
More Foreign Courses Eligible for CE Credit. Currently, only courses recognized by a foreign securities regulator qualify for CE credit. IIROC is proposing to broaden the types of compliance courses that qualify for CE to include courses offered by a foreign securities dealer or foreign course provider, even if they are not recognized by a foreign securities regulator. This proposed change could be of particular benefit to Canadian Firms with foreign dealer affiliates, allowing them to leverage existing courses offered by or to the foreign affiliate in their jurisdiction. Firms will still be required to ensure that courses chosen by their Approved Persons, including those offered by a foreign securities dealer or foreign course provider, are compliant with the requirements of the CE Rules.
Additional Late Fees. Firms are currently required to notify IIROC within 10 days of the end of a CE program cycle (i.e. January 10th) of all its CE participants that have met their CE requirements in that CE program cycle. Under the Proposed Amendments, Firms that fail to report by the 10th business day after the end of a cycle will be charged late fees that accumulate at a rate of $100 per CE participant, for each business day the Firm is late in reporting. If a Firm has not reported by the last business day of January, the fines stop accumulating, but IIROC will suspend the CE participants' IIROC approval. These fines can be significant for Firms with many Approved Persons.
Dealer-Delivered CE Programs. Under the Proposed Amendments, Firm-delivered programs would no longer be required to include a method of evaluation, such as an examination, course work, or case study.
More Stringent Rules for Former Approved Persons. Under the Proposed Amendments, former Approved Persons will no longer be able to use the Canadian Securities Course (CSC) and the Conduct and Practices Handbook Course (CPH) to satisfy CE requirements. Under the current CE Rules, former Approved Persons are permitted to receive up to 10 Professional Development course hours and 5 Compliance course hours for rewriting the CSC and CPH.
The first CE cycle that would be affected by the Proposed Amendments starts January 1, 2020.
Comments on the Proposed Amendments may be submitted to IIROC by August 26, 2019.
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