Why Wait? CIRO's Account Transfers Proposal

By: Michael Holder, Kanchan Mehta, Rijja Baig

If you have ever tried to transfer an investment account from one firm to another, you may have seen how delays can plague the process. Sometimes the delay is just long enough for the incumbent firm to “have a conversation” with your new client, and they have convinced them to stay.  Sometimes the recipient firm sends over incomplete transfer documents, which cause the incumbent firm to question their authenticity.  When transfers drag on for months, clients may abandon the move entirely. If this occurs due to market shifts in the interim, clients may experience potentially avoidable market declines. Delays may result in client complaints, civil action, or regulatory investigations, all of which require time and money to resolve, regardless of which side of the transfer you are on.  In all cases, the industry and the firms involved risk their reputation.

Prompt, standardized, and efficient account transfers are in everyone’s interest.  Account transfers should be prompt and smooth, delivering an outstanding client experience and increasing everyone’s faith that Canada has an efficient and fair capital markets system.

The Canadian Investment Regulatory Organization (“CIRO”) has released proposed rule amendments, along with a white paper, noting that account transfers consistently rank as the top complaint among investors and dealers alike, with the current volume of complaints in 2025 already surpassing that of 2024.

It’s not as though the securities industry and its regulators haven't been discussing the problem of transfer delays for years, so this move to establish concrete requirements is long overdue.  While the current proposed amendments are still out for comment until October 8, CIRO’s position is clear: there is no good reason for transfers to take more than 10 business days. Firms whose operations result in transfer delays risk reputational harm, loss of client trust, operational inefficiencies, and legal risk if clients suffer losses due to unreasonable delays.

CIRO has identified several key issues related to transfer delays. They pointed chiefly to outdated, inefficient manual processes, including reliance on faxes, wet signatures, and cheques. Notably, there have been inconsistent standards and fragmented oversight, with some requirements applying only to mutual fund and investment dealers, rather than to product manufacturers, such as guaranteed investment certificate and segregated fund issuers.  CIRO also highlighted poor communication, which led to rework and extended timelines.

CIRO has proposed:

• A 10-business-day deadline for completing all account transfers, even those with obstacles.

• Mandatory use of automated, electronic transfer processes wherever possible.

• Requirements for firms to promptly notify clients when there are impediments to a transfer.

• Development of an industry-wide, fully digitized, interoperable technology platform that supports all asset types, standardizes data formats, and allows real-time processing and tracking.

These proposed amendments are not yet rules; however, if approved, they will not take effect until sometime in 2026.  In the meantime, the risk of complaints, regulator enforcement action and court action remains.  Accordingly, we recommend that all firms review their account transfer times and, if greater than 10 business days, assess their operations to identify steps or requirements that lack a regulatory or legal basis and may create more legal risk than they protect.  

How can North Star help? 

The North Star Group is a unique combination of over 15 lawyers and regulatory consultants who can review your operations and help you assess your legal risks.  Our team of lawyers at North Star Legal and our deep bench of compliance consultants at North Star Consultants are here to help you maintain an outstanding client experience for existing, future, and past customers as well as minimize legal and regulatory risk.

Please contact us at info@northstarconsultants.com to discuss how we can assist you in navigating this evolving regulatory landscape.