Most firms fall into the third category; Deliberately and systematically, they focused their attention on conflict of interest provisions to meet the July 1 deadline before moving on to the KYP work, with most of the heavy lifting on that front taking place after Canada Day.
Referring to the fourth category, Carr-Pryce says, “There was a surprisingly large group of firms that really only started preparations in the fall, which meant it was either a really mad dash that ended at the end of the year.” was in compliance until, or in many cases meant [adopting] Few mitigating strategies, and a lot of work to be done in 2022.”
While most firms were technically in compliance as of January 1, he is still hearing a lot of uncertainty at the consultant level as a result of delayed rollouts of technical solutions, gaps in training, or other issues. Some firms are addressing the KYP challenge through mitigating solutions such as form-based processes, meaning they are not technically out of compliance, but their consultants and office workers are taking on the heavy administrative load.
According to Carre-Price, there are several reasons why some companies were unable to successfully meet deadlines. Although the principles behind the KYP rules did not change significantly, there were significant delays in the issuance of final guidance on KYP rules on the part of self-regulatory organizations, creating challenges for firms that took a wait-and-see approach. adopted. Others were financially constrained: in mid-2020, when many companies were finalizing their budgets for 2021, it was not yet clear to them whether regulatory compliance technology would become an investment they would need to make .
“When things finally took shape in 2021, and it became clear that advisors really needed some technical support to comply with KYP requirements, it was too late to get funding,” Carr-Price says. Huh.