The British Columbia Securities Commission (BCSC) released their 2014 Compliance Report Card last month, and listed the top five deficiencies they uncovered in their inspections.
The largest number of compliance shortcomings concerned firms’ policies and procedures. In 65% of reviews, regulators noted that policies and procedures manuals (PPMs) "generally did not reflect the current state of firms’ businesses, and in many cases, the firm failed to train staff about the content of their PPMs."
In 38% of inspections, investment dealers showed weakness in know-your-client (KYC) and know-your-product (KYP) areas, and could not demonstrate they had met their suitability obligations to clients.
Another 35% of firms failed to disclose information or conflicts of interest that a reasonable investor would consider important, while 32% saw compliance issues that were "mostly because the CCO [chief compliance officer] was not doing the job required by NI 31-103".
Lastly, 26% of firms were found deficient in advertising, marketing, and holding out. The BCSC says this was often because compliance reviewers did not hold authors to a strict enough standard and allowed them to omit required information, such whether returns quoted in advertisements were gross or net of fees.