NIN 2000/05 - Cold Calling by Members of Self Regulatory Bodies [NIN - Rescinded]

Published Date:	2000-01-28
Effective Date:	2000-01-26

On January 26, 2000, the Commission issued Blanket Order 33-501 (BC), which exempts members of recognized self regulatory bodies and their individual registrants from the restrictions on a person attending at or telephoning to any residence, as set out in section 49(2) of the Securities Act. Under this Order, the Executive Director may, after giving the affected registrant or class of registrants an opportunity to be heard, by order, suspend, cancel, or restrict the exemption provided by this Blanket Order.

The purpose of section 49 of the Act is to protect the public from overly aggressive sales practices. Section 49 covers both registrants, including those that are members of self regulatory bodies, as well as non-registrants. Because self regulatory bodies impose high standards on their members, the Commission believes that member firms and individual registrants of these organizations should be exempt from the cold calling restrictions found in section 49(2).

For example, the Investment Dealers Association (IDA), a self regulatory body, conducts annual sales reviews of its members and requires its registrants to have CIPF coverage, as well as imposing on its registrants higher capital and proficiency standards. The IDA is the only self regulatory body that the Commission has currently recognized. The Commission is in the process of reviewing an application for recognition from the Mutual Fund Dealers Association (MFDA). The Commission will look at the proposed sales reviews that the MFDA will carry out and the contingency fund its members will contribute to, when considering its application for recognition. Once the MFDA is recognized, its members and their individual registrants will also be entitled to the relief provided in BOR 33-501 (BC).

As a result of these types of safeguards which the IDA and other recognized self regulatory bodies have or will put in place, it is the Commission's opinion that the exemption in BOR 33-501 (BC) will not expose the public to an increase in the high-pressure sales tactics that section 49 is intended to protect against. Further, as British Columbia currently has cold calling restrictions that are more stringent than those in other Canadian jurisdictions (e.g., Ontario and Alberta), the Commission believes that market efficiency will be improved by relaxing the restrictions set out in section 49(2) and thus harmonizing British Columbia's approach to cold calling with that of most of the other provinces and territories.

DATED at Vancouver, British Columbia, on January 26, 2000.

Douglas M. Hyndman
Chair

Ref: BOR 33-501 (BC)
Section 49(2), Securities Act

This NIN refers to other documents. These documents can be found at the B.C. Securities Commission public website at www.bcsc.bc.ca in the Policy Documents database.