Investment Management: Fair Dealing: 

Suitability Standards

  

Suitability Requirements for Investment Advice

Position: Investment professionals must determine the suitability of investment recommendations and actions in advisory relationships, regardless of the degree or level of advice offered:

Rationale: Taking this kind of care will increase the likelihood that the investment professional understands the investment objectives, goals, and risk tolerances of the client. This further increases the likelihood that the professional can act in a manner that serves the best interests of the client.

Where stated: CAC Letter - OSC Fair Dealing 2004 (PDF)

 

Know the Client

Position: Investment advisers should take steps to “know their clients,” as well as to advise them carefully, fully, honestly, and in good faith.

Rationale: Investment professionals who advise clients on investment decisions, including recommending investments in certain stocks, owe those clients a duty beyond a general duty of good faith and care. They must exert considerable effort to ascertain the suitability of each investment recommendation that is made and to assess a client’s ongoing needs on a regular basis.

Where stated: CAC Letter - OSC Fair Dealing 2004 (PDF)

 

Suitability Standards

Position: Investment advisers should use the same standard for making suitability determinations when providing investment advice, regardless of the scope of advice being sought or provided.

Rationale: Investment professionals must make reasonable inquiries into the client’s investment experience, risk, and return objectives, and financial constraints to be able to provide appropriate advice to a client.

Where stated: CAC Letter - OSC Fair Dealing 2004 (PDF)