Advisors face new compliance, diversity and crypto rules as regulators increase enforcement activity
As Canadian regulators respond to evolving financial risks, technological innovation and public accountability, advisors are navigating a wave of regulatory changes in 2024 and into 2025.
From compliance audits to federal payment laws, these shifts affect how advisors structure their practices, recommend products and document relationships.
The following are 10 of the most significant regulatory developments impacting Canadian advisors:
1. Client Focused Reforms (CFRs) compliance sweeps
According to Torys LLP, regulators are continuing compliance sweeps to assess how well firms are applying Client Focused Reforms (CFRs), particularly with respect to conflict-of-interest mitigation, product selection, and disclosure standards.
A primary focus is whether registrants are justifying the recommendations of proprietary products over potentially cheaper or more suitable alternatives.
Advisors affiliated with bank-owned dealers or vertically integrated firms are especially affected, as they must document their rationale when selecting in-house products.
The sweeps are prompting updates to internal training, review procedures, and suitability documentation across firms of all sizes.
2. Modernized prospectus filing for investment funds
According to the Canadian Securities Administrators, the new shelf prospectus model for investment funds in continuous distribution simplifies filings, allowing for a base shelf document and separate supplements.
This model, which took effect in January 2024, reduces duplication and regulatory burden for fund managers.
Firms like CI Global Asset Management and Mackenzie Investments benefit from reduced filing complexity, allowing them to launch and update funds more quickly.
Advisors will gain earlier access to new fund details, while facing fewer delays when clients request fund-specific materials or documentation.
3. Retail Payment Activities Act (RPAA) rollout
As reported by Dentons, the RPAA introduces registration, risk management and safeguarding requirements for payment service providers.
The Bank of Canada will supervise compliance, and the regime will capture both fintechs and incumbents that move customer funds.
Advisors working with firms like Wealthsimple, which offer hybrid financial services with embedded payments, will need to evaluate those platforms’ compliance with the RPAA.
Client transfers, contributions and withdrawals through third-party fintechs must meet new operational risk safeguards, placing new due diligence expectations on advisors.
4. Strengthened anti-money laundering rules (FINTRAC)
According to Reuters, the federal government is proposing to expand FINTRAC’s powers, including real-time transaction access, broader audit powers, and updated reporting obligations.
The changes follow a string of high-profile enforcement gaps and are aimed at increasing oversight of suspicious transactions and politically exposed persons.
Advisors at firms like Raymond James and Canaccord Genuity must now implement enhanced due diligence procedures, especially for high-risk accounts.
These rules place greater responsibility on front-line advisors to flag irregularities and comply with updated client verification thresholds.
5. Crypto asset fund regulation clarity
The Canadian Securities Administrators released amendments that define crypto assets and establish requirements for investment funds that hold them, as reported by Crowdfund Insider.
These include valuation, custody, and disclosure standards for mutual funds and ETFs exposed to digital assets.
Advisors dealing in crypto funds, such as those managed by Purpose Investments or 3iQ, now face more explicit due diligence and disclosure expectations.
The clarified rules may also prompt traditional fund managers to enter the crypto space, offering new client options while increasing compliance obligations for advisors.
6. Proposed diversity disclosure for financial institutions
According to Reuters, federally regulated financial institutions will be required to publicly report the diversity composition of their boards and senior management.
The Department of Finance intends to introduce legislation to this effect, with the goal of increasing transparency on equity, diversity and inclusion.
This change impacts advisors linked to institutions like BMO or Sun Life, whose parent firms will need to prepare diversity data for public scrutiny.
For advisors working with institutional clients, this disclosure trend may also influence ESG-focused investment strategies and governance discussions.
7. Court ruling on fiduciary duties for brokers
According to Torys LLP, an Ontario Court of Appeal decision clarified that brokers may owe fiduciary duties to clients even in non-discretionary accounts if the relationship indicates reliance.
This represents a shift from previous interpretations where such duties were limited to managed accounts.
Independent advisors and discount brokerages must now reconsider how they describe advisory roles, especially when clients rely on their expertise.
This ruling increases potential liability, particularly for advisors operating under relationship models that blur the line between execution-only and full-service advice.
8. Finance Canada’s review of financial sector legislation
As outlined by Osler, Finance Canada launched a review of federal financial sector frameworks ahead of the 2025 sunset date. The review targets legislation governing banks, insurers and trust companies, focusing on digital risk, climate resiliency, and capital adequacy.
Advisors may see indirect impacts as financial product providers adjust to updated federal rules.
For example, changes in capital requirements could affect availability or structure of products like annuities or mortgage-backed securities, requiring advisors to revisit product recommendations.
9. Progress toward open banking framework
According to Dentons, the federal government is preparing to roll out an open banking framework starting in 2025. The model will standardize third-party access to financial data, giving clients more control and transparency over how their data is shared.
Advisors using digital tools for financial planning or account aggregation will need to ensure that data-sharing partners comply with the open banking framework.
Providers like Flinks and Wealthica will become central to advisory operations, while new consent and disclosure requirements could shift how client onboarding is handled.
10. Increase in regulatory proceedings expected in 2024–25
According to Norton Rose Fulbright, enforcement activity by Canadian regulators is expected to rise during the 2024–25 period, with a focus on product suitability, disclosure lapses and registrant conduct.
Firms are preparing for more proactive reviews and regulatory intervention.
Advisors may face a higher probability of contact with enforcement or audit teams, even absent direct complaints.
Those operating in higher-risk areas such as high-yield investments or emerging markets must ensure meticulous documentation, as procedural lapses could prompt regulatory action.
These 10 changes demonstrate how regulators are reshaping the Canadian advisory landscape with new expectations around digital infrastructure, fiduciary duty, and disclosure.
Advisors will need to adopt updated compliance strategies, reassess client documentation, and follow policy developments closely to remain aligned with evolving legal standards.
