The last talk that I would like to discuss after attending the Elder Day Conference last week is regarding vulnerable investors. Usually, we do not think of seniors as investors and their vulnerability. However, a presentation by FAIR Canada and the Canadian Centre for Elder Law highlighted the need for the protection of older and vulnerable elders across Canada. This legislation is found in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and related changes to its companion policy. National Instrument 31-103 (NI 31-103) is engaged because investment dealers are able to notice red flags through their interactions with investors and their knowledge of investing. NI 31-103’s safeguards are a trusted contact person (tcp) and temporary holds. The tcp places an obligation on dealers also known as registrants to obtain information from individual clients regarding trusted contact persons. Depending on the situation, trusted contact persons may need to provide written consent in specific circumstances. The circumstances in which the tcp would be engaged are: when a dealer had concerns regarding the potential exploitation of elder vulnerable clients or in situations where there is concern regarding the client’s mental capacity to act. Please note tcp does not have to be notified when clients open an account. It is expected that deals will contact and update tcp as needed throughout the client relationship. This is an added provision to protect vulnerable clients.

The second component is placing a temporary hold which creates a regulatory framework and creates a hold temporarily on transactions, withdrawals or transfers of investment accounts. Please note this does not involve banking or other types of bank accounts. This hold can only be placed unless there is a reasonable belief of financial exploitation of older vulnerable clients or where there is a concern regarding clients’ mental capacity in making financial decisions. This is a 30-day hold and after this time, the hold is either revoked or reasons to continue will be explained to the client. This should not be considered a safe harbour.

These safeguards provided protection to clients against situations where they may be taken advantage of or no longer have the capacity to act. These amendments were introduced by the Canadian Securities Administrators. Each province and territory across Canada and this legislation came into effect on December 21, 2022.

We will be following along with the progress of this legislation and if any further amendments are made to the legislation.

Thank you for reading and have a great day,

Aanchal Bajaj