Relationship disclosure explains the nature of the client–Dealer relationship, the products and services available, limitations on those products and services, fees and charges, responsibilities, reporting and complaint procedures. Material changes to fees and the product shelf alter important terms of that relationship. The Dealer should therefore provide updated disclosure to affected clients in a clear and timely manner. Option A is correct.
Waiting for the next trade could leave clients unaware of costs or service limitations that already affect their accounts. Updating only an internal manual does not communicate the change to clients. Disclosure is not dependent on a complaint being filed.
The communication should explain the revised charges, when they take effect, the effect of the restricted product range and any associated material conflicts. Clients should have sufficient information to assess whether the relationship continues to meet their needs. Depending on the nature of the changes, KYC, account appropriateness or suitability implications may also need review.
Relationship disclosure does not replace individualized KYC or suitability analysis. It establishes the framework within which those obligations are performed.
The current CIRO Retail Securities syllabus specifically requires understanding of the objective, content, form, frequency and review of relationship disclosure, including the Dealer’s business model, products, services and fee information.
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