Know-Your-Client (KYC) & suitability

The registered representative is responsible for the KYC information. That responsibility cannot be handed to the client, to a family member, or to a junior who filled in the form.

A sales assistant may gather preliminary information under supervision. A client may complete a questionnaire at home. Neither of those arrangements moves the responsibility. If the information is wrong, the representative owns the error, because the representative is the one who was required to take reasonable steps to know.

The second half of this outcome is currency. KYC information has a shelf life. A record from four years ago is a claim about a person who may no longer exist in the relevant sense: different job, different health, different debts, different plans.

The duty is to take reasonable steps to keep the information current, and to act when you learn of a material change. A material change is one that could alter the advice: a job loss, a divorce, an inheritance, a business sale, a health diagnosis, a new dependant, a large withdrawal, a decision to retire early, a decision to borrow against the house.

Here is a distinction worth carrying into the exam. There is no single universal interval in the rules that says "review every client once a year". Firms set review cycles, and a firm's cycle is a policy. The regulatory duty is the duty to keep information current and to respond to change. An answer that presents an annual review as the regulatory standard is a paraphrase of practice stated as a rule, which is one of the commonest defects in question banks and one of the easiest traps to fall into.

If a client will not answer update requests, the reasonable response is documented escalation, and often a restriction on new activity until the record is current. Silence is not consent.