The purpose of this communication is to advise that the MFDA will be conducting a Sales Compliance Audit of HUB Capital beginning on Monday, March 23, 2020. They expect to spend approximately two weeks at our Head Office and from there will select the branches/sub-branches that will be subject to onsite reviews. Onsite reviews will include an interview with the representative(s) located in the offices and detailed review of processes, client files, transactions, marketing and sales communication materials, social media presence, sales tools, etc.
We will advise the representatives as soon as the MFDA provide the details of the external locations selected.
The MFDA will be particularly focused on reasonability of KYC, transactions involving seniors and/or higher risk investments, leverage loans, quality of notes, new accounts, to name a few. The MFDA has specifically requested a listing of material changes to key KYC information i.e. Investment Knowledge, Income, Net Worth, Objectives, Risk and Time Horizon. Longer time-horizons for senior clients will be of particular focus as well and reasons for changes should be captured in detailed client notes.
The MFDA will also focus on deficiencies – the types of deficiencies that are being identified, repeat deficiencies, and how long it takes a representative to respond and resolve deficiencies. This includes the resolution of outstanding audit deficiencies. Hub Capital representatives should take the time before the MFDA audit, to review their outstanding deficiencies and take action to resolve them as soon as possible.
Please remember that all comments/information provided in your responses to deficiencies (both on RepVision or by email) become part of the audit trail and permanent client file, so we advise you to keep your responses brief, professional and address only the deficiency that has been identified.
We strongly recommend that you review your client files for the following:
- to ensure that all mutual fund information is filed separately from other investments/products held by the client (i.e. segregated funds/insurance and GICs) and that these files are clearly marked/distinguishable as mutual fund files vs. insurance files. (Keeping mutual fund and insurance files in separate filing cabinets is recommended, if possible.)
- to ensure that your files are professional, complete and compliant and do not contain any prohibited pre-signed blank or partially completed signed forms.
- to remove and archive all forms, documents, statements, etc. that are more than 3 years old to an archive file in a separate location. These forms, documents, statements must be kept for 7 years but can be moved to a separate file and archived in a separate cabinet.
Regards,
Cheryl Hamilton
Vice President Risk Management and Chief Compliance Officer