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Questions and Answers
What are the two types of responsibilities of a branch compliance officer (BCO) for a mutual fund dealer?
Specific business responsibilities and general compliance responsibilities.
A mutual fund dealer operating within a branch of a financial institution is the same entity as the institution.
False
What can a branch compliance officer do during their absence?
Designate an assistant or alternate BCO.
What is the purpose of regular staff sales communication and briefing sessions?
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What are the two types of responsibilities of a Branch Compliance Officer?
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What is the role of the Branch Compliance Officer in relation to clients?
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Which of the following are responsibilities of a Branch Compliance Officer? (Select all that apply)
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A Branch Compliance Officer can delegate tasks to anyone without any qualifications.
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What must be maintained by mutual fund dealers in relation to a Branch Compliance Officer? (Select all that apply)
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A BCO must ensure that clients understand they are purchasing mutual funds through a ______, which is separate from the financial institution.
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What should a BCO do to manage time effectively?
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Match the following terms with their definitions:
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Which of the following is NOT a topic for staff training sessions?
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Study Notes
The Branch Compliance Officer's Role
- The Branch Compliance Officer (BCO) is responsible for ensuring that mutual fund dealer activities are conducted properly within a branch. They must also ensure the physical structure of the branch conforms to good business practices and applicable rules and regulations.
- The BCO has two types of responsibilities:
- Business Responsibilities: including day-to-day administration, client interaction, sales representative training, and handling client complaints.
- Compliance Responsibilities: including ensuring sales representatives comply with dealer policies, enforcing internal control processes, liaising with the head office and regional compliance officer (RCO), and monitoring compliance with "Know Your Client" (KYC) and suitability requirements.
- The BCO can designate an assistant or alternate BCO in writing, to supervise during their absence or when the branch requires additional supervision.
The Physical Structure of the Branch
- The BCO is responsible for ensuring the physical structure of the branch meets good business practices and legal requirements.
- The physical structure of the branch must instill client confidence, through its appearance and image.
- Branch compliance officers and registered sales representatives must clearly identify the dealer to clients through signage, business cards, and other means.
- Clients must understand that when purchasing mutual funds within a branch of a financial institution, they are dealing with a separate mutual fund or securities dealer, and not the financial institution.
- Clients must be advised in writing and must acknowledge that the funds are not guaranteed by the financial institution, are not covered by deposit insurance, and will fluctuate in value and returns.
The Relationship with the Head Office and Regional Compliance Officer
- The BCO acts as the liaison between the branch and the dealer's head office and is responsible for staff registration, mutual fund sales, order-taking, client complaints, and the dealer's compliance process.
- The BCO typically communicates with the Regional Compliance Officer (RCO) for compliance-related issues and problems. The RCO is responsible for compliance with mutual fund regulatory requirements within their designated district or region.
Staff Training
- The BCO is responsible for holding regular staff training and briefing sessions, covering important topics like disclosure, sales communications, compliance, and behavioral issues.
- These sessions also help ensure that internal control systems are functioning properly.
- The BCO should review the allowable and prohibited activities of non-registered and registered staff with staff.
- The BCO should also review account documentation requirements, including identity verification requirements, and ensure that sales representatives understand the order-taking process and the importance of repeating orders back to the client.
- Sales representatives should also be trained on maintaining KYC information, including understanding factors that indicate a material change in a client's circumstances.
- The BCO should also reiterate to sales representatives the importance of following the rule restricting inter-provincial phone calls for mutual fund purchases, the ban on discretionary trading, and the importance of clearly explaining the forward pricing aspect of mutual funds.
- Other training topics include:
- Advertising and promotions
- Client complaints
- Leveraged trades
- Performance criteria and sales communications
- Unacceptable trades
- Disclosure
- Fees and loads
- Appropriate behavior
- Approved mutual fund dealer products
- Requests from non-residents
- Developments within the industry
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Description
Explore the critical role of the Branch Compliance Officer (BCO) in maintaining compliance and proper business practices within a mutual fund branch. This quiz covers their business and compliance responsibilities, as well as the importance of adherence to regulations and internal controls. Test your knowledge on the responsibilities that ensure client and organizational integrity.
