Heritage LAYOUT 05-11 · Heritage Education Funds Inc. (“Heritage”) is a Scholarship Plan...

Compliance

Policy Manual

for Registered Representatives

About this Policy Manual

Heritage Education Funds Inc. (“Heritage”) is a Scholarship Plan Dealer that markets and distributes securities such as the Heritage Plan and Impression Plan RESPs. This manual outlines our policies that reflect Heritage’s commitments, values and vision.

The purpose of this Policy Manual is to guide Registered Representatives, company officers, Board members and employees in carrying out the business activities of Heritage as a dealer of securities products. These policies have been developed by senior management and approved by our Board of Directors.

All Heritage personnel are governed by these policies. Compliance is required at all times. Should there be a conflict between the policies in this manual and securities, tax or any other legislation, the governing law will apply.

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ContentsGlossary ................................................................................... xi

1. About Heritage 1

1.1 Heritage’s Approach to Compliance ..............................11.1.1 Heritage Policies .....................................................11.1.2 Compliance Goals ...................................................21.1.3 How does Heritage “Self Regulate”? ...................2

1.2 Dealer Structure ................................................................31.2.1 Supervisory Structure ............................................31.2.2 Board of Directors ..................................................41.2.3 Internal Communications .....................................4

2. Registration & Qualifications 5

2.1 Individual Qualifications ................................................52.1.1 Registered Representatives ...................................52.1.2 Branch Managers ....................................................52.1.3 Chief Compliance Officer (CCO) ..........................62.1.4 Validity Period of RESPDAC Courses ................6

2.2 Registration Eligibility ....................................................72.2.1 General .....................................................................72.2.2 Selection Criteria.....................................................72.2.3 Interview Process ...................................................82.2.4 Distance Requirements .........................................8

2.3 Registration Requirements .............................................82.3.1 Registration Application (Form 33-109F4) ..........82.3.2 Working on a Part-Time Basis ...............................92.3.3 Branch Manager Registration Requirements .....112.3.4 Inter-Provincial Registration ..............................112.3.5 Representative Agreements ................................12

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2.3.6 Ongoing Obligations ...........................................122.3.7 Service Arrangements .........................................132.3.8 Confirmation of Registration ..............................142.3.9 Reporting Changes to Registration Information ....142.3.10 Reporting Absences .............................................152.3.11 Quebec - Errors & Omissions Insurance ..........152.3.12 Annual Renewal of License ................................152.3.13 Termination of License ........................................162.3.14 Transferring from Another Dealer ....................162.3.15 Reinstatement/Reactivation of a Terminated License ..............................................17

2.4 Continuing Education ....................................................172.4.1 Training Requirements ........................................172.4.2 Heritage Continuing Education (CE) Program .....192.4.3 CE Credit Requirements ......................................192.4.4 Heritage CE Credit Eligibility .............................202.4.5 Starting Your License in Mid-Cycle ...................222.4.6 Education Programs by Outside Parties ...........232.4.7 Delivery Vehicles and Media ..............................232.4.8 Failure to Achieve Minimum CE Credits .........232.4.9 Quebec – Professional Development Units .....24

3. Minimum Standards for Account Activity 25

3.1 Client Restrictions and Conditions .............................253.1.1 Residency Requirements .....................................253.1.2 Acceptable Forms of Identification ....................263.1.3 Receipt of Funds ...................................................263.1.4 Age of Majority .....................................................27

3.2 Minimum Account Standards ......................................273.2.1 Introduction ...........................................................273.2.2 General Account Opening Requirements.........273.2.3 Know Your Client Obligations ...........................283.2.4 Know Your Client Information...........................293.2.5 KYC for Joint Accounts ........................................30

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3.2.6 Updating KYC Information ................................303.2.7 Suitability Guidelines ..........................................303.2.8 Evidence of Client Trade Instructions ...............31

3.3 Account Conditions and Restrictions .........................323.3.1 Handling Trade Rejections ..................................323.3.2 Third Party Contributions ..................................323.3.3 No Discretionary Trading/Pre-Signed Forms ......323.3.4 Prohibited Trading Activity ................................333.3.5 No Tied Selling......................................................333.3.6 Deposit Instructions .............................................33

3.4 Evidence of Disclosure .................................................. 343.4.1 Disclosure Requirements .................................. 343.4.2 Disclosure Documentation to be Kept on File .....353.4.3 Prospectus..............................................................363.4.4 Leverage Disclosure .............................................363.4.5 Risk Factors ............................................................373.4.6 Disclosure of Commissions ................................373.4.7 Disclosure of Other Licenses Held ....................373.4.8 Separation of Business Activities under Dual License Status ..............................................38

4. Business Conduct 39

4.1 General ...............................................................................394.1.1 Code of Ethical Business Conduct .....................394.1.2 “Holding Out” Requirements .............................394.1.3 Business Names ....................................................40

4.2 Regulatory Examinations and Reviews ......................... 404.2.1 Securities Regulators and Inquiries ..................404.2.2 When in Receipt of a Written Summons or Inquiry ...............................................................414.2.3 Keeping Copies of Records .................................41

4.3 Conflicts of Interest.........................................................414.3.1 What are Conflicts of Interest? ...........................414.3.2 Personal Financial Dealings ...............................42

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4.3.3 Positions of Trust ..................................................43

4.4 Commissions, Fees and Referral Arrangements ......434.4.1 How are Commissions Paid? ..............................434.4.2 Holdbacks ............................................................. 444.4.3 Reserve Fund ........................................................ 444.4.4 Payments to Non-registered Individuals ......... 444.4.5 Third Party Arrangements ..................................454.4.6 Referral Arrangements ........................................454.4.7 Disclosing Referral Arrangements to Prospects ...46

4.5 Penalty Guidelines .........................................................474.5.1 What are the Penalty Guidelines? ......................47

5. Privacy Policies 49

5.1 Client Information ..........................................................495.1.1 Privacy Commitment to Clients .........................495.1.2 Collecting and Using Information .....................495.1.3 Limiting Use of Information ...............................495.1.4 Consent ...................................................................505.1.5 Protecting Information ........................................505.1.6 Openness................................................................505.1.7 Releasing Information .........................................505.1.8 Use of Clients’ Social Insurance Numbers .......515.1.9 Respecting and Responding to Privacy Concerns ................................................................515.1.10 Access to Client Information ..............................515.1.11 Location of Records ..............................................525.1.12 Privacy Officer Duties ..........................................525.1.13 Reporting Privacy Breaches ................................52

5.2 Leads/Prospect Information .........................................535.2.1 Principles of the Heritage Lead Program .........535.2.2 1: Accountability ...................................................535.2.3 2: Identifying Purposes........................................535.2.4 3: Consent ...............................................................545.2.5 4: Limiting Collection ..........................................54

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5.2.6 5: Limiting Use, Disclosure and Retention .......545.2.7 6: Accuracy .............................................................555.2.8 7: Safeguards .........................................................555.2.9 8: Openness ............................................................555.2.10 9: Individual Access..............................................565.2.11 10: Challenging Compliance ...............................56

6. Marketing & Communications 57

6.1 Advertising and Sales Communications ....................576.1.1 General ...................................................................576.1.2 Restrictions ............................................................576.1.3 Use of Personal Websites .....................................586.1.4 Approval Policy ...................................................586.1.5 Business Cards and Stationery ...........................59

6.2 Client Communications .................................................606.2.1 General Restrictions .............................................606.2.2 Client Files .............................................................61

6.3 Marketing Requirements and Disclosure .................626.3.1 Ability to Make Sales Communications ...........626.3.2 Media Policy ..........................................................626.3.3 Door Knocking ......................................................626.3.4 Accuracy of Information .....................................626.3.5 Prohibited Disclosure in Sales Communications ...................................................636.3.6 General Performance Data Requirements ........636.3.7 Performance Measurement Periods .................. 646.3.8 Other Disclosure and Warnings in Sales Communications .................................................. 64

6.4 Telemarketing and Do Not Call List Policies ............656.4.1 Pre-conditions that Permit Telemarketing Activity ...................................................................656.4.2 National DNCL Rules ..........................................676.4.3 DNCL Verification and Reporting Requirements ........................................................67

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6.4.4 General Telemarketing Requirements ..............686.4.5 Additional Telephone Requirements .................696.4.6 Additional ADAD Requirements .......................706.4.7 Additional Fax Requirements .............................706.4.8 Proper Holding Out .............................................706.4.9 Limits on Telemarketing Activities ...................716.4.10 Express Consent to be Contacted .......................726.4.11 DNCL Records Requirement ..............................72

6.5 Electronic and Mail Communications ........................736.5.1 General Communication ....................................736.5.2 Heritage Fax Correspondence and Memoranda............................................................736.5.3 Use of Email ...........................................................736.5.4 Outgoing Correspondence ..................................74

7. Minimum Standards for Branch Offices 75

7.1 Branches and Sub-Branches ..........................................757.1.1 What is a Branch Office? ......................................757.1.2 Registering Branch Offices ..................................76

7.2 Requirements for Branch Offices .................................767.2.1 General ...................................................................767.2.2 Physical Premises .................................................777.2.3 Signage ...................................................................777.2.4 Client Records .......................................................787.2.5 Telephone Operations ..........................................787.2.6 Administrative Staff .............................................78

7.3 Branch Office Records ....................................................797.3.1 General ...................................................................797.3.2 Client Files .............................................................797.3.3 Trade Reviews .......................................................807.3.4 Registered Representative Files ..........................807.3.5 Monthly Reports and Blotters.............................817.3.6 Complaint Files .....................................................827.3.7 Advertising Approval Files .................................82

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7.3.8 Training Files .........................................................827.3.9 Disaster Recovery Plan ........................................82

8. Minimum Standards for Supervision 83

8.1 Account and Service Requirements for Registered Representatives .....................................83

8.1.1 Availability Obligation ........................................838.1.2 Plan Servicing Responsibility .............................83

8.2 Branch Managers ........................................................... 848.2.1 Appointed Branch Managers ............................. 848.2.2 Branch Manager Responsibilities...................... 848.2.3 Daily Review of Account Activity .....................868.2.4 Monthly Review of Blotters ...............................878.2.5 Branch Office Continuity Plan ............................888.2.6 Delegation of Procedures ....................................89

9. Special Client Matters 91

9.1 Anti-Money Laundering and Terrorist Financing Policy ...........................................91

9.1.1 General Requirements .........................................919.1.2 Objectives of the AML Policy .............................919.1.3 What is Money Laundering? ...............................929.1.4 Methods of Money Laundering ..........................929.1.5 What is Terrorist Financing? ...............................939.1.6 What are Suspicious Transactions? ....................939.1.7 How to Identify a Suspicious Transaction ........949.1.8 Controls ..................................................................969.1.9 Training ..................................................................969.1.10 Reporting Suspicious Transactions ...................97

9.2 Complaint Handling .......................................................989.2.1 What is a Complaint? ...........................................989.2.2 Dispute Resolution Services................................989.2.3 Requirements for Complaint Handling ............99

9.2.4 Participation in the Resolution Process ...........1009.2.5 Reporting Complaints........................................100

10. Appendix 101

Code of Ethical Business Conduct ..................................1011.1.1 I. Preface ...............................................................1011.1.2 II. Definitions .......................................................1021.1.3 III. Guiding Principles........................................1021.1.4 IV. Standards .......................................................1031.1.5 V. Approaching Prospects/Clients ...................1061.1.6 VI. Presenting to Prospects/Clients .................1071.1.7 VII. Post-Contract................................................1091.1.8 VIII. Failure to Comply with this Code ...........111

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GlossaryThere are many terms used in this manual specific to Heritage and the RESP industry. We have attempted to explain them throughout the manual; however, some key terms are defined here for your reference.

Agreement A contract between an individual (e.g., Sales Representative or Sales Manager or Agency Director) and Heritage as applicable.

Anti-Money Laundering (AML) The rules, requirements and business practices designed to detect, prevent, report and prosecute acts or attempted acts that are prohibited under federal Proceeds of Crime (Money Laundering) and Terrorist Financing legislation.

Approved Designate Someone approved to take some kind of action on your behalf. In our context, it is an individual to whom the Branch Manager’s account approval and daily supervision responsibilities are delegated on a short-term basis.

Beneficiary A student designated by an RESP Subscriber as the person who will receive Educational Assistance Payments.

Branch Manager The person designated by Heritage to be responsible for the ongoing supervision of Registered Representatives who work at, or report to, Heritage through a branch location.

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Client A person who engages the professional advice or services of Heritage through a Registered Representative.

Client Communication Written communication by a Registered Representative and other Heritage personnel to a client, including trade confirmations and account statements. Does not include advertisements or sales communication.

Compliance Officer The Heritage staff member, including the Regional Vice Presidents of Compliance, who have responsibility for adherence to rules, regulations and legislation by the company and its personnel.

Code of Ethical Business Conduct A set of guidelines established by the RESP Dealers Association of Canada (RESPDAC) that set out ethical and behavioural standards of conduct for all RESPDAC members, their employees and Registered Representatives.

Dealing Representative The registration category for individuals, including Scholarship Plan sales representatives, who are registered in Canada to trade in investment products.

Disclosure Revealing or making known; providing required information orally or in writing.

Do Not Call List (DNCL) The national and Heritage Do Not Call Lists contain the contact information of people who have requested that they do not receive telemarketing calls.

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Educational Assistance Payment (EAP) An amount paid from CESGs or income earned in an RESP to a Beneficiary to assist with post-secondary education costs.

Holding Out Making representations, expressed or implied, concerning your services, expertise or registration.

Jurisdiction A specific geographical area (could be a province or territory).

Know Your Client (KYC) The obligation to obtain, assess and record detailed information about each client’s financial circumstances, investment needs and objectives, risk tolerance and investment knowledge.

Liable To be legally bound.

Misconduct Wrongdoing or behaviour that contravenes rules or policies.

Misrepresent To make an untrue statement of material fact or not stating a material fact that is required to be stated or necessary to prevent a statement that is made from being false or misleading.

National Registration Database (NRD) The online system established by Canada’s securities regulators for filing, processing and maintaining

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applications for registration (licensing) of all dealers and representatives under securities law.

Personal Information Protection and Electronic Documents Act (PIPEDA) Federal privacy legislation that sets out specific obligations for the collection, use and handling of clients’ personal information.

Pre-Authorized Debit (PAD) A payment system, approved by clients in advance, that authorizes a third party to make regular withdrawals; in our case, Heritage withdraws required contributions for Scholarship Plans.

Prospectus The comprehensive disclosure document that discloses all of the material facts regarding a security that is being distributed to the public.

Registered Education Savings Plan (RESP) A savings plan registered under the Income Tax Act that provides certain tax advantages to Subscribers (or “members”) who are saving money for a child’s post-secondary education.

Registered Education Savings Plan Dealers Association of Canada (RESPDAC) A national group consisting of participating Group Scholarship Plan Dealers (including Heritage), that acts as an advocacy group for RESPs in Canada.

Registered Representative An individual (also known as “registrant”) who is registered with a provincial or territorial securities regulator to engage in the business of dealing in securities.

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Sales Communications An oral or written communication by a Scholarship Plan Dealer or salespersons to Subscribers or potential Subscribers that is intended to encourage, solicit or recommend trading.

Securities Act The provincial/territorial law that regulates buying and selling stocks, bonds, and other securities.

Securities Regulator The Securities Commission or similar government agency that administers and enforces securities legislation in a particular province or territory.

Trade The disposition (sale) of any security for valuable consideration, as well as any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of a trade.

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About Heritage

1.1 Heritage’s Approach to Compliance

1.1.1 Heritage Policies

This manual governs the conduct of all Heritage personnel, including Registered Representatives, officers, directors and employees. We strive to serve our clients with integrity and professionalism and comply with all of our legal and ethical obligations. These policies are designed to further those goals.

We may update our policies to reflect changes in our expectations, our procedures or the law. All policy changes will be communicated to all Registered Representatives as they occur. All Heritage personnel are expected to review, understand and implement policy changes in a timely manner.

This manual summarizes key regulations that apply to Heritage and its Registered Representatives, but it is not intended to replace legislation. The laws governing trading in Scholarship Plans are complex and can vary from province to province. It is the responsibility of all Registered Representatives to know and comply with the regulations that apply in their jurisdiction and to make themselves aware of regulatory changes as they occur.

If you have a question about the legislation or policies that might apply in a particular situation or jurisdiction, speak to a Branch Manager or Compliance Officer, before you act.

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A B O U T H E R I T A G E

1.1 Heritage’s Approach to Compliance1Heritage is a founding member of the RESP Dealers Association of Canada (RESPDAC) and subscribes to the RESPDAC Code of Ethical Business Conduct. Compliance with the Code (see Appendix 1.1) is a condition of your Agreement with Heritage.

1.1.2 Compliance Goals

Our compliance goals are to ensure that Heritage, its staff and its Registered Representatives:

• maintain the highest standards of integrity and professionalism in all business dealings,

• provide full, true and plain disclosure to our clients and the public at all times,

• deal fairly and honestly with our clients, acting always in our clients’ best interests, and

• adhere to both the letter and the spirit of legislation that governs our conduct.

1.1.3 How does Heritage “Self Regulate”?

Heritage’s supervisory system supports our compliance goals and regulates the actions of our Registered Representatives and other personnel. We regulate our own conduct through:

• the publication and application of these policies,

• introductory training and continuing education of our Registered Representatives and other personnel,

• regulatory updates and bulletins distributed to all personnel through email, memos, meetings or our Intranet, rep.com, and

• ongoing supervision and regular reviews of business activity and sales practices by our Branch Managers and compliance staff.



1.2 Dealer Structure 11.2 Dealer Structure

1.2.1 Supervisory Structure

Heritage is a Scholarship Plan Dealer registered for dealing with applicable pooled or individual RESPs governed by federal and provincial legislation.

• Heritage’s Ultimate Designated Person (UDP) supervises activities we undertake to ensure compliance with these policies and with securities legislation. The UDP reports to the Board of Directors.

• Heritage’s Chief Compliance Officer (CCO) is responsible for maintaining and applying our compliance policies. The CCO also assesses compliance by Heritage and its personnel with securities legislation and supervises internal investigations and enforcement. The CCO reports to the UDP and to the Board of Directors.

• Our Vice Presidents, Corporate Compliance are responsible for developing and implementing policies and procedures, review of corporate processes including audits, and testing compliance programs. The Vice Presidents report to Heritage’s CCO.

• Our Regional Vice Presidents, Compliance and their designate (Compliance Officers) are responsible for applying our policies and supervising our compliance obligations in each region. The Compliance Officers report to Heritage’s CCO.

• Branch Managers are appointed by Heritage to supervise the conduct and business activities of the Registered Representatives who report to them. Branch Managers report to their Compliance Officer with respect to supervisory and compliance obligations.



1.2 Dealer Structure11.2.2 Board of Directors

Heritage’s Board of Directors is committed to maintaining high standards of ethics, integrity and compliance to ensure the company and its personnel are deserving of the trust and confidence of our clients and the investing public. The RESPDAC Code of Ethical Business Conduct is fundamental to the values of Heritage and essential to achieving our mission to lead the RESP industry by setting high standards of conduct and professional excellence. All Registered Representatives must abide by the Code of Ethical Business Conduct and the policies in this manual, and must ensure that their non-registered staff are aware of, and understand, this responsibility.

1.2.3 Internal Communications

Each Registered Representative is assigned access to online communication and administration systems that they must access frequently to stay informed of business information, product and marketing changes, compliance bulletins and client inquiries. These systems (which may change from time to time) include:

• www.heritagerep.com: Administration and Customer Relationship Management,

• SalesTree: Sales Force Automation, and

• @heritageresp.com: secure email system.

Access instructions are provided to each Registered Representative upon registration and can be obtained from your Branch Manager or Compliance Officer.

Branch Managers will communicate regulatory updates, new procedures and policy changes to all Registered Representatives and appropriate administrators and employees.


Registration & Qualifications

2.1 Individual Qualifications

2.1.1 Registered Representatives

Registered Representatives must be qualified in accordance with the regulatory requirements of each jurisdiction, as well as Heritage’s requirements. This includes:

• successful completion of the RESPDAC Sales Representatives Proficiency exam,

• successful completion of the Heritage Core Learning Program and product knowledge exam,

• being interviewed and approved by the Branch Manager,

• approval by the Compliance Officer, and

• registration by the Securities Commission in the province or territory where the Registered Representative will be dealing in Heritage securities.

2.1.2 Branch Managers

Heritage requires that Branch Managers have the following qualifications:

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R E G I S T R A T I O N & Q U A L I F I C A T I O N S

2.1 Individual Qualifications2• two years of supervisory experience, preferably

related to the financial industry,

• successful completion of the RESPDAC Branch Manager Proficiency Course,

• successful completion of the Heritage product knowledge exam, and

• be registered and approved as a Dealing Representative by the Securities Commission in the province or territory where the Branch Manager lives.

2.1.3 Chief Compliance Officer (CCO)

The Chief Compliance Officer must be qualified in accordance with the regulatory requirements of each jurisdiction.

The CCO must pass:

• the RESPDAC Sales Representative Proficiency exam,

• the RESPDAC Branch Manager Proficiency exam, and

• the Partners, Directors and Officers (PDO) exam.

2.1.4 Validity Period of RESPDAC Courses

Registered Representatives must have completed the RESPDAC Sales Representatives Proficiency Course within 36 months (three years) prior to the date of registration or reinstatement unless they have been registered for at least 12 months during the 36-month period before applying for registration or reactivation.



2.2 Registration Eligibility 22.2 Registration Eligibility

2.2.1 General

The Branch Manager and Compliance Officer must review and approve any new potential Registered Representative.

2.2.2 Selection Criteria

Individuals seeking to be registered as a Heritage Registered Representative under the Securities Act are expected to demonstrate that they possess three fundamental traits in order to be considered suitable:

• Competency: only qualified persons with knowledge of financial services, products and compliance may be considered.

• Integrity: must be honest, of good character, reputable and free of a criminal history.

• Financial Solvency: financially viable with a credit history that is acceptable to Heritage (ongoing verification as appropriate).

All candidates will be evaluated against the following criteria:

• personal background, education and work experience,

• understanding of RESPs, sales techniques, securities regulation and conduct requirements,

• no criminal history or poor credit (verification via RCMP and Equifax reports),

• strong oral and written communication and presentation skills, and



2.3 Registration Requirements2• adaptability, willingness to accept direction and

ability to work well with others.

2.2.3 Interview Process

Interested candidates will be interviewed by the Branch Manager who will initiate the registration and training process, when appropriate.

2.2.4 Distance Requirements

Candidates may become a Registered Representative or remain a Registered Representative if they live within a reasonable distance from the reporting Branch Office.

Important: For questionable arrangements (e.g., unreasonable distance to the Branch location or supervisor), a Branch Manager may be required to provide, at the discretion of the Compliance Officer, the following in writing:

• a reasonable, practical business plan covering the manner in which regular contact shall be assured (including face-to-face meetings), or

• supervisory records or logs that confirm that regular minimum contact (including face-to-face meetings) have taken place.

2.3 Registration Requirements

2.3.1 Registration Application (Form 33-109F4)

Every person seeking registration as a Dealing Representative must complete and submit a Form 33-109F4 Application, provide required details and explanations, and agree that every representation made on the form is accurate. Once approved by the Branch



2.3 Registration Requirements 2Manager and Compliance Officer, all applications for registration must be submitted to Heritage’s Registration Department for filing with the Securities Commission by Heritage electronically through the NRD.

Supporting documents that must accompany a Form 33-109F4 include:

• a passport size photo,

• a cheque for registration fees, including an NRD fee,

• a RCMP/Police report application for criminal record verification,

• acknowledgement of other business activities (if applicable),

• a Candidate Information Form,

• all attachments pertaining to Form 33-109F4 disclosure issues,

• a confirmation of the Branch Manager assigned for supervision,

• a business card order form and appropriate fees, and

• a signed Heritage Sales Representative or Sales Manager Agreement.

2.3.2 Working on a Part-Time Basis

Exemptions from the full-time requirement may be obtained in some provinces and territories. Registered Representatives who wish to work on a less than full-time basis must submit the required Exemption from Full-Time Requirements form to the Branch Manager and Compliance Officer.

The intention to work part-time must be fully disclosed on Form 33-109F4, and the exemption must be granted



2.3 Registration Requirements2by the Branch Manager, the Compliance Officer and the applicable Securities Commission. Before the request is approved, the Registered Representative is required to provide the following information:

• explanation of the number of hours the applicant will be working as a Heritage Representative,

• disclosure of any other business and/or volunteer activities the applicant is engaged in,

• disclosure of any other registrations or licenses the applicant holds,

• confirmation that the other business activity will not interfere with their duties and responsibilities,

• confirmation that the activity does not cause damage to the reputation of Heritage or the Scholarship Plan industry,

• confirmation the applicant

» spends sufficient time engaged in the profession to maintain expertise in the field, and

» provides adequate service to his/her clients, and

• in some situations, a letter may be required relating to the Representative’s other business activities stating the other business or employer sees no conflict with this person offering Scholarship Plans.

When circumstances change after registration, (i.e., the Registered Representative wants to change from full-time to part-time, part-time to full-time or make other business or volunteer activity changes), information must be reported to and approved by the Branch Manager within five business days. The Branch Manager is required to inform the Compliance Officer immediately.



2.3 Registration Requirements 22.3.3 Branch Manager Registration Requirements

To act as a Branch Manager, Registered Representatives must:

• meet the applicable proficiency requirements (skills and abilities) outlined in Section 2.1, Individual Qualifications,

• have no financial, civil or criminal issues, and

• be reviewed and approved by the Compliance Officer.

2.3.4 Inter-Provincial Registration

Registered Representatives must meet the following requirements if they want to hold/maintain a Scholarship Plan license in a non-resident jurisdiction (a province where they do not live):

• hold a valid Scholarship Plan license that is in good standing,

• submit a completed Inter-Provincial Registration Acknowledgement Form along with an Inter-Provincial Agreement,

• be supervised by a Branch Manager who is resident in the province,

• report to a Branch Office in the non-resident province,

• be approved by the resident Compliance Officer, and

• be approved by the applicable Securities Commission.

A non-resident Registered Representative is not eligible to be a Branch Manager even if already a registered Branch Manager in his/her resident province.



2.3 Registration Requirements22.3.5 Representative Agreements

There must be a valid written agreement between the Registered Representative and Heritage. This agreement:

• indicates that the securities-related business is that of Heritage and not that of the Registered Representative or agency,

• clearly outlines the responsibilities of both Heritage and Registered Representative, including those responsible for supervisory functions, and

• clarifies Heritage’s responsibility for the actions of its Registered Representatives.

No Heritage Registered Representative shall, directly or indirectly, engage in any securities-related business (e.g., Scholarship Plans) except in accordance with the following:

• all such securities-related business for Heritage is conducted through Heritage facilities and in accordance with Heritage policies,

• all revenues, fees or consideration in any form relating to any business engaged in by or on behalf of Heritage is paid or credited to Heritage and recorded in Heritage’s record keeping system,

• the relationship between Heritage and any Branch Office person conducting securities-related business on account of Heritage is typically that of a principal and agent, or

• the business or trade name under which such securities-related business is conducted is registered with and approved by Heritage.

2.3.6 Ongoing Obligations

Registered Representatives must agree to:



2.3 Registration Requirements 2• maintain their registration to deal in securities in

good standing in each province or territory where they propose to act,

• ongoing supervision by Heritage of all business dealings that relate to trading or advising in securities through or on behalf of Heritage,

• comply with Heritage policies and directions and all application legislation and regulations that apply to the Registered Representative’s dealing or advising in securities, and

• ensure all books and records prepared and maintained by the Registered Representative in respect of such business of Heritage will be in accordance with applicable legislation, will be the property of Heritage and shall be available for review by, and delivery to, Heritage during normal business hours,

2.3.7 Service Arrangements

A Registered Representative may engage the services of another person or company in a “Service Arrangement” to perform certain functions related to the Registered Representative’s business provided that the services to be performed do not require registration under securities laws and are not services that must be performed personally by the Registered Representative or by Heritage. These services may include telemarketing, online marketing, mass mail and email marketing, and any other activities related to the sale of Heritage products provided no “selling” activities takes place (i.e., nothing in furtherance of a trade).

Before engaging in a Service Arrangement, the Registered Representative must report it to the Branch Manager who will ensure it is reviewed by Corporate Compilance. Service Arrangements must have a written agreement



2.3 Registration Requirements2between the Registered Representative and the service provider.

2.3.8 Confirmation of Registration

Once Heritage has received confirmation of the registration from the appropriate Securities Commission, the Registration Department at Home Office will provide written confirmation of the effective date of license to the Branch Office. Individuals who are not registered or who are waiting for confirmation of a license are not permitted to sell, carry out any advertisements, engage in any solicitation or conduct that furthers a trade, or propose the sale of Heritage products.

2.3.9 Reporting Changes to Registration Information

Every Registered Representative must report within five business days any change that occurs to their registration particulars (or event which may have occurred). This must be communicated to the Home Office Registration Department at [email protected] concerning such issues as:

• criminal, civil and other legal proceedings, bankruptcies, insolvencies, garnishments, judgments and related events,

• regulatory proceedings,

• disciplinary action by regulatory bodies,

• registration or licensing by any regulatory body, and

• personal information change, other employment changes (if applicable).

Failure to provide updates to the personal information contained within the registration documentation within five business days could result in a late filing fee.



2.3 Registration Requirements 22.3.10 Reporting Absences

Registered Representatives must report absences of more than five business days to their Branch Manager. The Branch Manager must keep track of these absences in their supervisory logs. Branch Managers must report to the Compliance Officer when a Registered Representative’s absence will exceed 14 calendar days.

2.3.11 Quebec - Errors & Omissions Insurance

Registered Representatives licensed in Quebec must provide evidence of Errors & Omissions (E&O) Insurance to the Autorité des Marchés Financiers when they register their license. Heritage will arrange for coverage through its carrier for anyone who does not have this coverage already.

2.3.12 Annual Renewal of License

Licenses must be renewed annually (December 31st) with renewal documentation provided to Home Office by November 15th each year. Registered Representatives must submit, or comply with, the following:

• a signed renewal form including confirmation of changes in personal circumstances and applicable fees,

• the NRD renewal fee, conditional upon the applicable jurisdiction(s) where approved,

• compliance with the Heritage Continuing Education Program (described in Subsection 2.4.2, Heritage Continuing Education (CE) Program), and

• for Quebec licenses, provide evidence of E&O insurance or purchase coverage through Heritage’s insurance provider.



2.3 Registration Requirements2Failure to meet these requirements may result in a late filing fee or non-renewal of the Registered Representative’s license.

2.3.13 Termination of License

A Registered Representative may for any reason terminate their Scholarship Plan license with Heritage. A Registered Representative must submit a written letter of resignation to the Branch Manager and Compliance Officer prior to the resignation becoming effective. All Heritage property must be returned to the Branch Manager including all files, reports, records, blotters, correspondence, marketing material, forms and signs on the day the termination becomes effective.

These obligations are outlined in detail in the Sales Representative and Sales Manager Agreements.

Heritage reserves the right to terminate a Registered Representative’s license if they are found to be in breach of Heritage policies, securities regulations, civil judgments or criminal proceedings, or any provision of the Representative Agreement.

2.3.14 Transferring from Another Dealer

Registered Representatives requesting a transfer from another dealer must successfully complete all required courses and examinations and provide applicable fees for registration. The Registered Representative must have been licensed under applicable securities regulation in the equivalent category and request a transfer within 90 days (three months) of their most recent license termination date.



2.4 Continuing Education 22.3.15 Reinstatement/Reactivation of a Terminated License

An individual may usually be able to reinstate their registration by submitting a Form 31-109F7 to Heritage. This form may only be used if all of the following apply:

1. The request is made on or before three months after the termination date of the individual’s former sponsoring firm.

2. There have been no changes to the information previously submitted in respect of Items 13 (Regulatory Disclosure), 14 (Criminal Disclosure), 15 (Civil Disclosure) and 16 (Financial Disclosure) of the individual’s Form 33-109F4 since the individual left their former sponsoring firm.

3. The individual’s employment, partnership or agency relationship with their former sponsoring firm did not end because the individual was dismissed, or was asked by the firm to resign, following an allegation against the individual of criminal activity, a breach of securities legislation, or a breach of the rules of a Self-Regulatory Organization.

Registered Representatives who do not meet all of the above conditions must apply for reinstatement by completing a new Form 33-109F4 by making the NRD submission entitled “Reactivation of Registration”.

2.4 Continuing Education

2.4.1 Training Requirements

Heritage requires all new Registered Representatives to complete a training program, currently known as the Heritage Core Learning, and other training as designated



2.4 Continuing Education2by the Branch Manager. This training covers, at a minimum, the following topics:

• General Knowledge: An overview of Heritage, the Scholarship Plan industry and the Registered Representative’s role, including the range of permitted activities.

• Product Knowledge: Detailed orientation of the products offered by Heritage.

• Advising the Client: Practical skills required to obtain and interpret Know Your Client information to ensure that Registered Representatives meet “suitability” obligations.

• Administration: Heritage’s internal systems and technology, processes and controls, and record keeping.

• Sales Process: Disclosure requirements, transaction documentation requirements, compensation policies, approval processes, client communications, sales skills (presentation) and marketing.

• Ethics and Code of Conduct: Acceptable and non-acceptable business practices, compliance policies, procedures and regulatory requirements, including sales practice procedures.

The Branch Manager will sign the New Registrant Training Log to confirm that the training program has been successfully completed. For Registered Representatives transferring from another registered Dealer, consideration may be given to the individual’s industry experience and professional development (this must be approved by the Compliance Officer).



2.4 Continuing Education 22.4.2 Heritage Continuing Education (CE) Program

Heritage mandates the CE Program for all Registered Representatives starting May 1, 2011. The CE program requires continuous training in product and compliance matters on a two-year cycle. Ongoing education and internal programs are intended to keep Registered Representatives up-to-date on sales, product and compliance related subjects.

Registered Representatives are expected to update their knowledge by:

• keeping up-to-date on the products offered by Heritage,

• attending Heritage meetings and other training sessions sponsored by their Branch Manager or Heritage,

• reading compliance, bulletins and notices published by Heritage and posted on www.heritagerep.com, and

• being aware of other relevant financial and business news.

The Registered Representative will be required to sign a Compliance Acknowledgement on an annual basis confirming that they have read the policy manual and that they commit to abide by the policies, which would include the Heritage CE program.

For Quebec Representatives: As Quebec Representatives are already subject to CE credit requirements, this Heritage CE Program does not apply to Heritage Representatives who are licensed in Quebec.

2.4.3 CE Credit Requirements

Registered Representatives must earn 30 Heritage CE credits in a two-year cycle (a minimum of 10 credits



2.4 Continuing Education2must be achieved by October 31st of the first year of each cycle). The initial Heritage CE cycle starts May 1, 2011 and ends October 31, 2012. The credit requirement for the initial period only is 23 credits (minimum of 5 credits by October 31, 2011) on a pro-rata basis given the shortened period. Subsequent cycles will continue thereafter starting November 1st and will be a full 24-month cycles, ending on October 31st of the second year.

New Registered Representatives: The minimum credit requirement (10 credits by October 31st in the first year of their initial cycle) does not apply.

Example: A Registered Representative becomes licensed on May 1, 2011. The first two-year cycle for this Registered Representative ends on October 31, 2012.

Reference: For additional information on pro-rated credit requirements, refer to Subsection 2.4.5, Starting Your License in Mid-Cycle.

2.4.4 Heritage CE Credit Eligibility

The course requirements for Registered Representatives in the CE cycle will generally consist of those provided by Heritage. Evidence of completing programs or self-study materials are the responsibility of the Registered Representative and must be provided when asked for confirmation of CE credits completed. Heritage will make available as possible the use of electronic tools to aid in maintaining a log of all CE credits. Otherwise, Registered Representatives are responsible for maintaining their own logs.

Eligible learning sessions or self-study materials include (but are not limited to) the following:

1. Branch or Agency meetings (1 credit)

2. Heritage training webinars (1 credit)

3. Heritage compliance meetings (3 credits)



2.4 Continuing Education 24. Heritage workshops (4 credits)

5. Heritage sales conferences (6 credits)

6. Heritage University (8 credits)

7. Third-party sales process training or industry-related seminars (1-10 credits). (Refer to Subsection 2.4.6, Education Programs by Outside Parties for more details.)

Learning programs and self-study modules can change from time to time. Refer to rep.com for an updated list of what Heritage study sessions or materials are offered. Attendance to be confirmed by the Branch Manager, or by such other systems that Heritage may put in place.

Important:

• Every 100 net units of sales production are worth 2 CE credits towards Professional Development, to a maximum of 6 credits in any year (12 credits maximum per cycle).

• New Registered Representatives will receive 10 credits upon completion of the Heritage Core Learning training program (refer to Subsection 2.4.1, Training Requirements for details).

• Third-party sales process training or industry-related seminars may not count for more than 10 credits in a cycle.

• Programs or seminars that are eligible for Heritage CE credits and completed within a given cycle apply only to that cycle and may not be carried forward.

Note: Heritage CE credit values are determined as follows:

• In general, 1 hour of learning in an acceptable program is equal to 1 Heritage CE credit.



2.4 Continuing Education2• All learning sessions or self-study materials must be

at least 30 minutes to be eligible for credits (0.5 credit minimum).

• Incremental times will be rounded down, i.e., a 2¾-hour session will be accredited at 2½ hours.

These guidelines are subject to periodic review and could change if necessary.

2.4.5 Starting Your License in Mid-Cycle

All Registered Representatives who becomes licensed after the start of the cycle (i.e., with less than 24 full months until the end of the cycle) will have their total CE credit requirement prorated in their initial cycle. The Pro-Rated Credit Table is as follows:

Number of Full Months

Total CE Credits

24 30

23 29

22 28

21 26

20 25

19 24

18 23

17 21

16 20

15 19

14 18

13 16

12 15

11 14

10 13

9 11

8 10

7 9



2.4 Continuing Education 26 8

5 6

4 5

3 4

2 3

1 1

0 0

2.4.6 Education Programs by Outside Parties

To be considered for Heritage CE credits, relevant training activities or programs offered by outside parties must be approved by Corporate Compliance and be issued a number of credits for the activity. Registered Representatives must submit the desired training program with the course outline via Compliance Support in advance for pre-approval based on satisfying the prescribed education parameters. A program certificate of completion must be provided to Compliance Support to earn the approved credits.

2.4.7 Delivery Vehicles and Media

The CE program allows flexibility in the delivery of education opportunities related to Heritage products and compliance. A wide range of activities or media may be used alone or in combination, provided they are appropriate to the content and participants. Training may be accomplished in conjunction with meetings or programs with a different primary purpose, provided that a meaningful amount of time is devoted to it.

2.4.8 Failure to Achieve Minimum CE Credits

If sufficient CE credits are not obtained before the end of the 24-month period, a renewal certificate will not be issued and the Compliance Department will suspend or terminate the Registered Representative’s license. Registered



2.4 Continuing Education2Representatives and their Branch Managers are responsible for ensuring compliance with these requirements.

Important: Failure to obtain the minimum 10 credits by October 31st in Year 1 of a cycle may lead to disciplinary action including suspension or termination of your Heritage license.

Note: Exemptions from the above requirement will be considered on a case-by-case basis by Corporate Compliance.

2.4.9 Quebec – Professional Development Units

Registered Representatives licensed in Quebec are required to take part in ongoing training and education activities recognized by the Chambre de la Sécurité Financière to earn Professional Development Units (PDUs). The training requirements consist of 10 General PDUs, 10 Specific PDUs (to the sector of registration) and 10 Compliance PDUs every 24 months.

To be considered for PDUs, training activities must be pre-approved by the Chambre and be issued a registration number for the activity. The Chambre maintains the records for all Registered Representatives relating to the number of PDUs accumulated. If sufficient PDUs are not obtained before the end of the 24 month period, a renewal certificate will not be issued and the Autorité des marchés financiers (AMF) will terminate the Registered Representative’s license.

All Registered Representatives who hold a Quebec license or an insurance license are responsible for keeping track of their own PDUs. Heritage is not responsible for filing PDUs with the Chambre.


Minimum Standards for Account Activity

3.1 Client Restrictions and Conditions

3.1.1 Residency Requirements

Securities regulations permit the sale of securities (e.g., Scholarship Plans) only to clients who live in the province or territory where Heritage and its Registered Representatives are licensed. Therefore, Heritage RESPs, or any trade involving Heritage RESPs, may only be sold to clients that live in the same province where the Registered Representative and Heritage are registered.

However, if a client moves and no longer lives in the province, the standard contributions to an existing RESP may continue under federal law providing the Beneficiary resides in Canada each time a contribution is made.

Important: Registered Representatives cannot further a trade (e.g., new business, additional units) with any non-resident prospect or client without an active license for that province.

3


MIN IMUM STANDARDS FOR ACCOUNT ACT Iv I T Y

3.1 Client Restrictions and Conditions33.1.2 Acceptable Forms of Identification

Registered Representatives must verify the signature of the Plan holder when opening any new Plan account, verifying the termination of a Plan or any requests to withdraw funds.

The following is a list of acceptable forms of identification that may be used for signature verification:

• driver’s license,

• passport,

• Age of Majority card,

• birth certificate (if client is less than 21 years of age),

• provincial health card (not acceptable in Ontario, Manitoba and Prince Edward Island), and

• record of landing or permanent resident card or other similar document (e.g., Old Age Security card, a certificate of Indian status).

3.1.3 Receipt of Funds

Heritage does not accept cash, cash equivalents (e.g., traveler’s cheques) or cheques payable to a third party. Registered Representatives are not permitted to handle client cash or to facilitate the client in violating this policy. Registered Representatives must accept funds only in the following forms (payable to Heritage Educational Foundation):

• personalized cheque,

• certified cheque,

• bank draft,

• money order, or

• pre-authorized deposit.


MINIMUM STANDARDS FOR ACCOUNT ACTIvITY

3.2 Minimum Account Standards 33.1.4 Age of Majority

Trades may not be completed with, or instructions accepted from, a person who has not reached the age of majority in the province or territory where that person resides.

3.2 Minimum Account Standards

3.2.1 Introduction

The Relationship Disclosure Document must be provided to a new client prior to engaging in a trade or opening of a Plan. The Relationship Disclosure Document includes all costs a client may pay with the Plans.

The first step for meeting compliance with the Know Your Client (KYC) requirements is completing proper documentation when Registered Representatives open new Plan accounts. The documentation must be complete, accurate and consistent with current personal circumstances and financial capabilities. It must also comply with all relevant regulations and laws regarding the KYC rule.

3.2.2 General Account Opening Requirements

There are specific requirements and documentation that must be completed and approved before a Registered Representative can open an account for a client. These requirements, which are explained in detail below, include:

• gathering Know Your Client information,

• listing information about Beneficiaries such as their ages and Social Insurance Numbers,



3.2 Minimum Account Standards3• presenting a savings approach that is well suited to the

client’s situation including the Beneficiary’s education aspirations (if known),

• documenting any instance where a client wants to deviate from recommendations and guidelines,

• providing required disclosure (including fees, relationship with Heritage and RESP account rules and policies), and

• providing a Prospectus.

The Branch Manager approves the opening of new accounts (e.g., enrollment applications) and supervises all account activity in the Branch Office.

3.2.3 Know Your Client Obligations

1. Registered Representatives must take reasonable steps to ensure that before making a recommendation to, or accepting instructions from a client, that the proposed purchase or sale is suitable for the client with reference to the client’s:

• financial circumstances,

• risk tolerance,

• investment knowledge,

• investment needs and objectives, and

• time horizon.

Registered Representatives are required to establish whether or not the client is borrowing funds (leveraging) in the transaction. If the client is using borrowed funds, the risks of leveraging must be discussed.

2. Despite Subsection 1, if a Registered Representative receives an instruction from a client to buy or sell that, in the Registered Representative’s opinion, would not be suitable for the client, the Registered Representative should not act



3.2 Minimum Account Standards 3on the instruction without first informing the client that in the Registered Representative’s opinion, the transaction is not suitable for the client. Representatives are required to provide evidence supporting the additional disclosure using the Client Suitability Form.

3.2.4 Know Your Client Information

KYC information includes:

• Age: The client’s date of birth must be recorded.

• Number of dependents: The number of people for whom a client is/are financially responsible.

• Investment knowledge: The client’s understanding of investing, investment products and their associated risks.

• Risk tolerance: The client’s willingness to accept risk and the client’s ability to withstand declines in the value of their Plan.

• Employer/occupation: Each client’s type of employment or business operation and the name of the employer or self-employment must be indicated. In Quebec the address of the employer and industry sector is also required.

• Annual income: This should represent annual income from all relevant sources.

• Net worth: This should be calculated as estimated liquid assets plus fixed assets less estimated liabilities. Net worth should only include assets of the account holder and their spouse.

• Investment objective: What is the client’s goal or objective? How much do they want to save and what are their expectations from the investment? The client’s objective should line up with the objectives of a Heritage RESP—a long-term savings plan that focuses on safety of principal and interest income.



3.2 Minimum Account Standards3• Time horizon: Most children will enter post-secondary

school during their 18th year, which provides clients with a finite time horizon. Registered Representatives should know the client’s time horizon and ensure that the terms of the Plan are consistent with such timing.

3.2.5 KYC for Joint Accounts

For joint accounts, certain KYC information such as age and investment knowledge should be collected for each individual account holder. Annual income and net worth can be collected for each individual or on a combined basis as long as it is clear which method was used. Investment objectives, time horizon and risk tolerance should relate to the account and should not be collected separately for each individual account holder.

3.2.6 Updating KYC Information

After the account is opened, it is the Registered Representative’s responsibility to perform a suitability review before any additional transactions are accepted and to note any material changes (e.g., job loss, long-term illness, new debt financing, etc.). It is good practice to review current KYC information each time the Registered Representative has contact with the client to ensure that investment objectives are being met.

In Quebec, KYC information must be updated for all clients at a minimum of once every 24 months.

3.2.7 Suitability Guidelines

The Heritage RESP type, mode and terms should be consistent with the client’s stated financial needs, time horizon and risk tolerance. The client’s contribution obligation should also be consistent with their ability to afford or maintain a Heritage RESP (the general “guideline” of 5% of household income applies).



3.2 Minimum Account Standards 33.2.8 Evidence of Client Trade Instructions

Heritage and its Registered Representatives are expected to maintain detailed, specific and complete records of client instructions for all trades, whether executed or unexecuted. This record should include at a minimum:

• the account to which the trade or instruction relates,

• the date(s) that the instructions were given and the date the trade was completed,

• as close as possible, the date of cancellation,

• when the trade or instruction is placed by an individual other than the representative on the account, the name and rep number of the individual completing the trade,

• when the trade was unsolicited and determined to be unsuitable, evidence that: the transaction was unsolicited, a suitability review was performed and the client was advised that the proposed transaction was unsuitable,

• the terms and conditions of the trade or instructions and any modification or cancellation of the trade or instructions, and

• in the case of unit reduction or Plan terminations, instructions must be obtained in writing when a client requests a return of principal from their Plan(s).

Maintaining a detailed and accurate record of client instructions is an important internal control that provides an audit trail for Heritage in the event of a dispute.

Reference: For additional information on:

• Client identification, refer to Subsection 3.1.2, Acceptable Forms of Identification.

• Records Retention, refer to Subsection 7.3.3, Trade Reviews.



3.3 Account Conditions and Restrictions33.3 Account Conditions and Restrictions

3.3.1 Handling Trade Rejections

Notification of trade rejections may come from your Branch Manager or Home Office from time to time. The Branch Manager must document all trade rejections including resolution details. Registered Representatives must follow up with clients in the event that a transaction is rejected for any reason. The Registered Representative must do the following, as appropriate:

• contact the client in an effort to address any deficiency,

• provide the missing detail in writing, which may require follow-up action, or

• return funds to the client.

3.3.2 Third Party Contributions

Cheques or PAD instructions by a third party may be permitted if the Client Suitability Form is completed showing the circumstances and the relationship to the client. It is prohibited for an individual to endorse a cheque for deposit to their account at Heritage. Full KYC details concerning the third party contributor may be required on the Client Suitability Form in order to perform a reliable review and assessment on suitability.

Important: If the third party is a corporation, the incorporation number and place of incorporation are required information details.

3.3.3 No Discretionary Trading / Pre-Signed Forms

Registered Representatives are prohibited from obtaining pre-signed forms from their clients or prospective clients as this may be evidence that a Registered Representative



3.3 Account Conditions and Restrictions 3is engaging in discretionary trading. Registered Representatives may only use forms that have been signed by the client after information on the form has been properly completed.

Registered Representatives are not permitted to accept discretionary trading authority from a client.

3.3.4 Prohibited Trading Activity

Transactions or excessive transactions that are executed by a Registered Representative that generate commissions, overrides and/or earn other compensation or other benefits, with no significant benefit to the client (also known as “churning”) are prohibited.

3.3.5 No Tied Selling

No Registered Representative is permitted to ask a client to purchase or use any product or service, either as a condition or on terms that would appear to a reasonable person to be a condition of selling particular securities.

No Registered Representative is permitted to ask a client to invest in particular securities, either as a condition or on terms that would appear to a reasonable person to be a condition for supplying or continuing to supply products or services.

3.3.6 Deposit Instructions

Cheques are payable to the Heritage Educational Foundation. The body and figure must match, and the cheque appropriately dated and signed by the payer(s). The instructions provided by the client(s) must be followed; otherwise, client(s) must authorize any changes to payment instructions in writing. Generally, the options available for changing deposit instructions by the client(s) are as follow:



3.4 Evidence of Disclosure3• write another cheque,

• amend the cheque provided and initial it, or

• provide written instructions for the initial payment via PAD.

3.4 Evidence of Disclosure

3.4.1 Disclosure Requirements

A Registered Representative’s lack of full disclosure prevents the client from making an informed decision about their investment, and is inappropriate and unprofessional. A Registered Representative’s obligations to disclose certain information to clients in writing is a fundamental part of several securities requirements including the following:

• Relationship Disclosure Document: This document provides a description of the costs clients will pay in making, holding and selling investments.

• Disclosure Checklist: This is confirmation of the mandatory disclosures required when engaging in trade activity, including delivery of a Prospectus, holding out requirements, associated fees and charges, Social Insurance Number requirements, termination rights and other mandated items.

• Conflicts of Interest: Any conflict or potential conflict of interest that arises between the interests of Heritage or the Registered Representative and the interests of the client must be disclosed to the client.

• Referral Arrangements: Written disclosure of referral arrangements must be made to clients before any transaction takes place.



3.4 Evidence of Disclosure 3• Dual License Disclosure: Clear disclosure must be

provided to clients that any activities relating to any gainful occupation with a license in financial non-securities that are not the business of Heritage are not Heritage’s responsibility.

• Leveraging Risk Disclosure: When a new account is opened or when a client is making a purchase with borrowed monies, Registered Representatives must provide a risk disclosure document containing the prescribed information.

• Plan Change Disclosure: Registered Representatives must provide a risk disclosure document containing the associated significant risks involved and potential interest adjustments (over $250) when completing Plan Adjustment documentation for changes to a Plan.

• Suitability Disclosure: Registered Representatives must provide a risk disclosure document (Client Suitability Form) containing the associated risk factors for any trade or Plan Adjustment that does not meet or appear to meet suitability and affordability requirements for unsolicited trades or Plan transactions.

• Other Disclosures: Other disclosure requirements contained in provincial securities legislation, including the obligation to deliver a Prospectus.

3.4.2 Disclosure Documentation to be Kept on File

Heritage and its Registered Representatives are required to keep enough documentation on file for audit purposes. This includes:

• client’s signature acknowledging that they were given the required disclosures, or

• copies of disclosure documents in the client files along with detailed notes of client meetings and discussions



3.4 Evidence of Disclosure3that show that the disclosure had been provided (as specifically approved by the Compliance Officer).

3.4.3 Prospectus

Every client must be given a copy of a current Prospectus either before the purchase agreement is entered into or within two business days after the purchase. Failure to provide a Prospectus within two days of a client signing an enrollment application can result in a full refund to the client even if the termination occurs after 60 days from enrollment.

3.4.4 Leverage Disclosure

If a Registered Representative believes that, after having exercised reasonable diligence, a client will use borrowed money to finance any part of their contributions to an RESP, the Registered Representative must not recommend the proposed purchase, unless the Registered Representative has:

a. provided the client with a written statement in substantially the following form:

“Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines”, and

b. received a written acknowledgement from the client confirming that the client has read the statement referred to in paragraph a). This acknowledgement must be marked and initialed by the client on the enrollment application form or Plan Adjustment instruction form.



3.4 Evidence of Disclosure 33.4.5 Risk Factors

Registered Representatives must explain to every client that:

• Heritage products are not insured by the Canada Deposit Insurance Corporation (RESP funds are considered “assets under administration” in the hands of the Depository and covered under the Trust Indenture),

• rates of interest that may be earned on funds invested in the Plan are subject to market fluctuations and may increase or decrease, in response to economic and political factors,

• the Scholarship Plan Dealer or the Foundation does not guarantee investments in whole or part, and

• future EAPs cannot be projected, and past results are not indicative of future returns.

3.4.6 Disclosure of Commissions

If asked, a Registered Representative must disclose that they receive a commission based on the sale of Heritage RESPs and that commission is paid by Heritage.

3.4.7 Disclosure of Other Licenses Held

A Registered Representative may carry out non-securities-related financial planning services and sales of non-securities products as a dual occupation outside of Heritage business, if approved in advance by the Branch Manager and Compliance Officer. Registered Representatives must provide each client or prospective client with a Dual License Disclosure Form to ensure that there are no conflicts of interest.

Direct contact with clients or prospects for Heritage-related business must always involve disclosure of the



3.4 Evidence of Disclosure3Registered Representative’s dual license status (supported by providing the Dual License Disclosure Form). This is not a solicitation for the other business activity; it is a disclosure required under the Securities Act. It tells the client that though the Registered Representative holds a Scholarship Plan license to deal in Heritage RESPs, the Registered Representative also holds an insurance license, for example, to deal in insurance products with the insurance company (or the reverse).

3.4.8 Separation of Business Activities under Dual License Status

A Heritage Registered Representative who holds another license such as an Insurance license, should not engage in both businesses at the same time. The client must not be confused that you are selling the Heritage Plan from your insurance license/other entity.


Business Conduct

4.1 General

4.1.1 Code of Ethical Business Conduct

All Registered Representatives must comply with the RESPDAC Code of Ethical Business Conduct and ensure that any non-registered individuals with whom they are associated for Heritage business purposes understand and follow these policies.

Reference: For additional information, refer to Appendix 1 Code of Ethical Business Conduct.

4.1.2 “Holding Out” Requirements

Heritage and its Registered Representatives are responsible for how they describe or “hold themselves out” to their clients and the public. The client or prospective client must clearly understand with which company they are dealing. Heritage and its Registered Representatives must make sure that adequate disclosure includes the following:

• Registered Representatives are acting on behalf of the Dealer (Heritage Education Funds Inc.),

• the Dealer, which is the distributor of the Plans, and the Foundation, which is the promoter of the Plans, are separate entities,

4


B U S I N E S S C O N D U C T

4.2 Regulatory Examinations and Reviews4• the full legal name of the Dealer (Heritage Education

Funds Inc.) is used on all correspondences, business cards and marketing materials, and shall be included on any contracts, account statements or confirmations of Heritage, and

• all Branch Offices must display the legal name of Heritage Education Funds Inc. or the approved trade name, Heritage Education Funds, on all signage, business cards and stationery.

4.1.3 Business Names

All business carried on by Heritage or by any Registered Representative on its behalf will be in the name of Heritage Education Funds Inc. or a business or trade or style name owned by Heritage or an affiliated corporation of Heritage.

Registered Representatives that run operations through a corporation are prohibited from using that corporate name in any manner in the promotion or sale of the Heritage products. This includes sales materials, advertisements, letterhead, business cards and office signage. Heritage pays all commission revenues from personal sales to registered individuals and not their personal service corporations.

4.2 Regulatory Examinations and Reviews

4.2.1 Securities Regulators and Inquiries

The provincial and territorial Securities Commissions have broad investigative powers that cover all market participants, including Scholarship Plan Dealers and Registered Representatives. Regulators are authorized to conduct compliance reviews of Dealers and their



4.3 Conflicts of Interest 4Registered Representatives, examine financial records, investigate complaints of misconduct and demand that records and evidence be produced.

4.2.2 When in Receipt of a Written Summons or Inquiry

When the Securities Commission contacts a Registered Representative about an inquiry or investigation, the Registered Representative must contact the Branch Manager and Compliance Officer for guidance. If a Registered Representative is ordered to appear before or is summoned by the Securities Commission, they must always cooperate and never impede any specific direction or summons. A Registered Representative always has the right to consult legal counsel to obtain advice regarding such orders or summons.

Reference: For related information on clients’ privacy, refer to Section 5.1, Client Information.

4.2.3 Keeping Copies of Records

Registered Representatives must keep a copy of all records provided in response to regulatory requests. Copies must be given to the Compliance Officer for review before they are provided to the Securities Commission, unless otherwise ordered or instructed by the Securities Commission.

4.3 Conflicts of Interest

4.3.1 What are Conflicts of Interest?

Registered Representatives must be aware that conflicts may happen between the interests of the Registered Representative and the interests of the client – this is known as conflict of interest. If a conflict or potential



4.3 Conflicts of Interest4conflict of interest happens, the Registered Representative must tell the Branch Manager and the Compliance Officer immediately. Together they will ensure that it is addressed through “responsible business judgment” to determine the appropriateness of opening a new account or accepting a transaction from a client.

Responsible business judgment means the use of reasonable care and diligence (serious effort). This is necessary when you address the conflict or potential conflict of interest because it ensures the action is done in the best interests of the client. The exercise of responsible business judgment varies depending on the type of conflict of interest and the client’s circumstances.

It is the Registered Representative’s responsibility to inform Heritage about conflicts of interest and inform clients, as required.

4.3.2 Personal Financial Dealings

Registered Representatives must avoid personal financial dealings with clients. These dealings create a potential for the Registered Representative to place their own interests above those of the client.

Examples of personal financial dealings with clients — which are all prohibited – include:

• Lending funds to or borrowing funds from clients

• Personal involvement in outside business activity: A Registered Representative must not be involved in a business arrangement with a client, or as a partner, shareholder, Director or Officer of a business owned, co-owned or controlled by the client.

• Monetary or non-monetary benefits to/from clients: A Registered Representative is not permitted to use monetary or non-monetary benefits such as gifts or



4.4 Commissions, Fees and Referral Arrangements 4charitable donations to circumvent policies and conceal breaches.

• Gifts or cash in exchange for a sale or referral: A Registered Representative may not provide substantial gifts or cash ($25 or more) to a client as off-book compensation in exchange for new business or referrals.

Heritage must be told in advance of any personal financial or business dealings between Registered Representatives and clients. Heritage will monitor outside business activities for conflicts of interest to make sure that they are managed properly. If a conflict cannot be properly managed with the outside activity, it will not be permitted.

4.3.3 Positions of Trust

If a Registered Representative is in a position of trust with a client, the potential exists for conflict of interest. Examples of a position of trust include the Registered Representative acting as a pastor, executor, trustee or guardian for a client. Where there is such a position of influence, Registered Representatives have a duty to report the relationship to their Branch Manager or Compliance Officer to ensure a conflict of interest is avoided.

4.4 Commissions, Fees and Referral Arrangements

4.4.1 How are Commissions Paid?

Heritage pays commissions directly to each Registered Representative in each jurisdiction. Heritage currently



4.4 Commissions, Fees and Referral Arrangements 4pays commissions once per week. This is outlined in the Agreements.

4.4.2 Holdbacks

As outlined in the Agreements, Heritage may hold back funds from commissions payable to cover money owing to the company. This can include:

• chargebacks of commissions for reduction of units or cancellation of Scholarship Plans where commissions have already been paid to the Registered Representative,

• fines applied by Heritage for breaches of its policies and procedures, and

• other debts incurred on the Registered Representative’s behalf.

4.4.3 Reserve Fund

Registered Representatives are required to establish a reserve fund account with Heritage that is funded by deductions from commissions. The reserve fund covers any unearned commissions that result from terminated agreements. Any balance of funds that remains is returned to the Registered Representative after termination based on the terms of the Agreement with Heritage.

4.4.4 Payments to Non-registered Individuals

Anyone who is not licensed cannot earn or receive commission from the sale of securities, including Scholarship Plans. However, a nominal payment may be made under the condition that it is not tied to the act of furthering a trade. For example, a telemarketer may be paid a salary or a payment based on booked appointments; however, the amount of the payment cannot be equal to



4.4 Commissions, Fees and Referral Arrangements 4or greater than the approximate amount of commission earned by the Registered Representative.

4.4.5 Third Party Arrangements

All third party arrangements (relationships with outside individuals or companies) are contracted directly through Heritage and not between the Registered Representative and the third party. Examples of third party arrangements include:

• insurance companies that want to have their sales team offer RESPs to the public,

• mutual fund companies that are registered to offer Scholarship Plans, or

• marketing ventures where Heritage is being promoted or named in the advertisement or trade show.

All such relationships must be submitted for approval by Home Office. Registered Representatives cannot enter into such an arrangement, or sign contracts, on behalf of Heritage.

4.4.6 Referral Arrangements

When an individual is paid a fee in return for introducing a prospective client to a Registered Representative, that is a referral arrangement. There is a potential conflict of interest in all paid referral arrangements, because the individual that makes the referral has a financial interest in introducing the client to the other service provider.

Referral arrangements may only be completed under the following conditions, before opening the client’s account or any services are provided to the client:



4.4 Commissions, Fees and Referral Arrangements 4• a written agreement has been made between Heritage

and the person or company receiving the referral fee in the form prescribed by Heritage,

• the Compliance and/or Legal Department is required to approve the referral arrangement in writing before entering into a referral arrangement,

• the Registered Representative has taken reasonable steps to ensure that the person being referred is qualified and, if applicable, registered to provide those services,

• Heritage records all referral fees received or paid on its records,

• Heritage is required to make all payments for referral fees to the company or person named in the referral agreement, and

• Registered Representatives must ensure that the information prescribed by Subsection 4.4.7, Disclosing Referral Arrangements to Prospects (below) is provided to the client in writing.

4.4.7 Disclosing Referral Arrangements to Prospects

If contact with a prospective client relates to a referral arrangement, then the Registered Representative must provide a written disclosure document to the client.

Registered Representatives must be aware of other legal obligations that may impact referral arrangements, including privacy legislation.

Reference: For additional information on the Privacy Policy Requirements, refer to Section 5.2, Leads/Prospect Information.



4.5 Penalty Guidelines 44.5 Penalty Guidelines

4.5.1 What are the Penalty Guidelines?

Compliance with our policies and the applicable regulations is a condition of your Agreement with Heritage. Heritage reserves the right to impose disciplinary penalties or sanctions on those who do not fulfill this requirement. Sanctions may include, but are not limited to:

• monetary sanctions (fines),

• extra supervision,

• restrictions on practice,

• additional conditions on licensing, and

• suspension or termination of the Registered Representative’s license.

Note: Heritage, at its sole discretion, may publish the names of Registered Representatives that have been penalized or sanctioned along with the misconduct details through any of its compliance bulletins or www.heritagerep.com.


Privacy Policies

5.1 Client Information

5.1.1 Privacy Commitment to Clients

Protecting the privacy and confidentiality of personal information provided by clients is very important to both Heritage Education Funds Inc. and Heritage Educational Foundation. Whether business with clients is conducted through the Internet, over the phone or in their home, Heritage’s goal is to treat the personal information that clients provide with the utmost respect and in accordance with the following Privacy Policy.

5.1.2 Collecting and Using Information

Heritage uses current information to offer new products and services to its existing clients. In order to offer these new products or services to clients, Heritage will share client information with its partners where express consent has been provided or where not prohibited by law.

5.1.3 Limiting Use of Information

Heritage only keeps information that is required for the administration of Heritage RESPs. Unless the client consents, this information will not be disclosed for any other purpose than for which it was collected.

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P R I vA C Y P O L I C I E S

5.1 Client Information55.1.4 Consent

When clients enroll in a Heritage RESP, apply for an Education Assistance Payment(s) or provide their signature for any material changes to their Plan, clients agree to the use of their personal information as permitted under the Personal Information Protection and Electronic Documents Act (PIPEDA).

Personal information is provided to the government when applying for the Canada Education Savings Grant (CESG), Alberta Centennial Education Savings Plan grant (ACES), Canada Learning Bond (CLB), the Quebec Education Savings Incentive (QESI) and to register Clients’ Plans as a Registered Education Savings Plan (RESP) under Section 146.1 of the Income Tax Act.

Heritage will ensure that a client’s personal information is accurate, complete and up-to-date; however, it is a client’s responsibility to inform Heritage of any changes to any personal details and to ensure the accuracy of Heritage’s records.

5.1.5 Protecting Information

Heritage protects all personal information with appropriate safeguards and security measures. A client’s information is retained for the time it is required and for the purpose it is intended.

5.1.6 Openness

If requested, Heritage will make available the policies and practices about how personal information is managed.

5.1.7 Releasing Information

Heritage may provide a client’s information to other persons, but only:



5.1 Client Information 5• when it has the consent of the applicable client,

• to agents or suppliers that assist in servicing clients, or

• when required or permitted to do so by law.

5.1.8 Use of Clients’ Social Insurance Numbers

Heritage is required by law to record the Social Insurance Number when opening an RESP account. This information is provided to Canada Revenue Agency (CRA) to register Clients’ Plans under Section 146.1 of the Income Tax Act and to Human Resources and Skills Development Canada (HRSDC) in order to apply for the CESG, when applicable.

5.1.9 Respecting and Responding to Privacy Concerns

Heritage will investigate and respond to client concerns about any aspect of the handling of personal information. If clients have any questions or concerns regarding this policy or the protection of their personal information, they should be instructed to contact Heritage’s Privacy Officer.

5.1.10 Access to Client Information

Heritage employees and Registered Representatives may have access to client records provided that they have a specific need to know in connection with the servicing of a client’s Plan and to assist clients with any changes. If requested, Heritage will provide a client with details of the personal information it has retained about the client.

Clients and Beneficiaries have the right to access their personal information when permitted by law. This request should be submitted in writing, signed by the client and/or the Beneficiary, to the Customer Service Department.



5.1 Client Information55.1.11 Location of Records

Client records are retained in electronic and/or paper format at the offices of the registered Dealer, namely:

Heritage Education Funds Inc. 700 - 2005 Sheppard Ave. Toronto, ON M2J 5B4 416.502.2500 800.739.2101

5.1.12 Privacy Officer Duties

Heritage has appointed a Privacy Officer within the organization whose job it is to:

• ensure compliance with the Ten Principles (refer to Subsection 5.2.1) for the Protection of Privacy and other provisions of the PIPEDA,

• respond to requests for access to and correction of personal information and general issues concerning personal information,

• work with the Information and Privacy Commissioner during the investigation of a privacy complaint against the organization, and

• be responsible for managing the necessary changes to Heritage policies and procedures, inquiry and complaint processes so that they conform to the current legislation.

5.1.13 Reporting Privacy Breaches

A privacy breach occurs when someone gains access to personal information, by mistake, on purpose or as part of criminal activity. If a Registered Representative learns of a breach of our privacy policies, they must immediately report the incident to the Compliance Officer and/or the Privacy Officer.



5.2 Leads/Prospect Information 55.2 Leads/Prospect Information

5.2.1 Principles of the Heritage Lead Program

Heritage has Ten Principles that are applied to its Lead Program. Heritage is strongly committed to these principles. Registered Representatives should review each principle below and understand how they relate to the Lead Program.

If Registered Representatives will be using a list of names for prospecting or have obtained a list from a third party (including Home Office), they must acknowledge, understand and agree to each of the following principles.

5.2.2 1: Accountability

Registered Representatives are permitted to obtain personal information internally and externally but are accountable for ensuring the protection of the information obtained and to use the information only for the purpose that it was intended. In the event that a Registered Representative intends to use a list broker company or other lead source, they must ensure a signed referral agreement is in place with Heritage.

Heritage has a designated Privacy Officer who enforces PIPEDA throughout the organization. Registered Representatives are required to follow the Referral Arrangements policies found in Subsection 4.4.6.

5.2.3 2: Identifying Purposes

Registered Representatives must tell clients or prospects that they represent Heritage. Any information collected through third parties or through referrals for the purpose of marketing should be communicated to the prospect.



5.2 Leads/Prospect Information55.2.4 3: Consent

Registered Representatives obtain personal information from various prospects that have said they would like to be contacted. Marketing material that generates personal information must have a clearly visible opt-in/opt-out option available. This allows the prospect to make a clear choice whether they agree to having their information used for marketing purposes.

If Registered Representatives do not have consent to contact the prospect, Registered Representatives may not contact them. The personal information must be destroyed and the Do Not Call List (DNCL) rules must be followed.

Reference: For additional information on DNCL rules, refer to Section 6.4, Telemarketing and Do Not Call Policies.

5.2.5 4: Limiting Collection

Heritage or its Registered Representatives only collect information that is required to provide prospects with valuable information about its products or services. Heritage or its Registered Representatives do not ask for personal information that is not relevant to the nature of their business.

5.2.6 5: Limiting Use, Disclosure and Retention

Heritage limits the use of personal information by making sure that prospects have a choice in whether they want to be contacted. All material used to gather personal information has opt-in/opt-out options visible to the prospects. When a Registered Representative contacts a prospect, whether from a personal referral or otherwise, the prospect must be informed of the Registered Representative’s name, what firm the Registered Representative represents and, when asked, how the information was obtained.



5.2 Leads/Prospect Information 5Personal information obtained as a referral (lead) is kept on file for the purpose of future callbacks providing the prospect has agreed to a Registered Representative’s return call. Information CANNOT be kept if the prospect says they are not interested. The Registered Representative must respect the laws which govern the Do Not Call List. If a person does not wish to be contacted, the personal information must be destroyed.

5.2.7 6: Accuracy

Registered Representatives are required to make every effort to ensure all information obtained is accurate. When dealing with third party list broker companies, Registered Representatives are permitted to deal only with reputable companies with whom Heritage has an approved referral agreement in place. It is up to these third party companies to comply with PIPEDA and the law that governs the Do Not Call List and to follow through on their commitment to these policies.

Heritage will alter any personal information contained in its database within 48 hours of a prospect’s call indicating their information needs to be changed or removed.

5.2.8 7: Safeguards

Heritage is responsible for the security and the protection of personal information. Measures have been taken to ensure that all information transferred to Heritage is performed through a highly secure password protected system.

5.2.9 8: Openness

All Registered Representatives are required to read and understand the policies and procedures prior to signing off on them. Registered Representatives may deal with an outside list broker company providing that:



5.2 Leads/Prospect Information5• a contract is in place with Heritage and the list broker

to protect a prospect’s privacy, and

• the lead program has been approved by Home Office and satisfies all regulatory requirements prior to the Registered Representative engaging with any list broker company.

5.2.10 9: Individual Access

Registered Representatives who obtain and maintain data lists must ensure personal information is made known to the prospects if requested. Individuals who receive access to lists are required to comply with Heritage’s Privacy, Lead and Referral Arrangement policies. Any employee or Registered Representative having questions concerning the Privacy Act may contact the Compliance Officer and/or the Privacy Officer as indicated in subsection 5.1.11, Location of Records.

Reference: For additional information on referrals, refer to Subsection 4.4.6, Referral Arrangements.

5.2.11 10: Challenging Compliance

Prospects have the right to challenge Heritage’s compliance with the Privacy Policy. An employee or Registered Representative must direct the prospect to the Privacy Officer in order to resolve such issues.


Marketing & Communications

6.1 Advertising and Sales Communications

6.1.1 General

All regional advertising must be sent to the Branch Manager and Corporate Compliance for approval before it is used in the marketplace. Any advertising placed before approval is given (or continued to be marketed beyond the identified period of approval) may be removed at the expense of the Branch and the Registered Representative, and may result in disciplinary action. All outdated materials must be pulled from use immediately.

Business directory listings may be used provided that they are associated with a registered Branch location with approved contact information. The listing must be updated as changes occur.

Reference: For information on approval of marketing materials, refer to Subsection 6.1.4, Approval Policy.

6.1.2 Restrictions

Registered Representatives will not give to the public, participate in, or allow their name to be used with any advertisement or sales communication which:

• contains any untrue statement or omission of a material fact or is otherwise false or misleading. This includes the use of visual images such as a photograph,

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M A R k E T I N G & C O M M U N I C A T I O N S

6.1 Advertising and Sales Communications6sketch, drawing, logo or graph that gives a misleading message or impression,

• contains an unjustified promise of specific results,

• uses unrepresentative statistics to suggest unwarranted or exaggerated conclusions, or fails to identify the assumptions made in arriving at these conclusions,

• contains any opinion or forecast of future events that is not clearly labeled as an opinion,

• fails to fairly present the potential risks to the client,

• is against or harmful to the interests of the public, Heritage or its Registered Representatives, or

• does not comply with any applicable legislation or guidelines, policies or directives of any regulatory authority with jurisdiction over Heritage.

6.1.3 Use of Personal Websites

Heritage does not permit the use of personal websites, other than those created/administered by Heritage Home Office (e.g., Facebook), for any Heritage-related promotions, solicitations or advertising. Banner ads may be permitted for websites, but they must first be approved by your Branch Manager and Corporate Compliance.

6.1.4 Approval Policy

All regional sales, marketing and telemarketing materials must be submitted to the Branch Manager and Corporate Compliance for review and approval. Once the material submitted has been approved in writing, it may then be used in the marketplace for a period not exceeding one year or such shorter period as Corporate Compliance may advise.



6.1 Advertising and Sales Communications 6If necessary, approved materials may require updating or may have to be removed from use to accommodate changes (e.g., to Heritage policies, regulatory, product, CRA etc.). Personal contact details for all regional advertisements must conform to the Holding Out requirements.

All advertisements or sales literature must display the name of the dealer (Heritage Education Funds Inc.) prominently as the distributor in all advertisements. All final approved pieces are property of Heritage and may be used at its discretion (which may include posting on www.heritagerep.com for others to use).

Note: Heritage provides marketing materials that have been pre-approved for immediate use. See the list of approved materials in rep.com.

Reference: For additional information on Holding Out requirements, refer to Subsection 4.1.2, “Holding Out” Requirements.

6.1.5 Business Cards and Stationery

Business cards and stationery are typically printed through Home Office. A direct telephone line can be added providing it is not the landline of a non-registered location (e.g., a residence that is not registered). The Registered Representative must ensure that the client is not confused about for which entity they are conducting securities business.

The full legal name of the Registered Representative must be displayed on the business card. The contact information on business cards and marketing materials must only be that of the registered location.

The approved titles that may be displayed on Heritage business cards as specifically authorized are:

• Managing Agency Director,

• Executive Agency Director,



6.2 Client Communications6• Agency Director,

• Associate Agency Director,

• Sales Manager,

• Branch Manager,

• Associate Branch Manager,

• Executive Sales Representative, and

• Sales Representative.

In Quebec, business cards must also include the title of “Scholarship Plan Representative”.

6.2 Client Communications

6.2.1 General Restrictions

No client communication can:

• be untrue or misleading or use an image such as a photograph, sketch, logo or graph that conveys a misleading impression,

• make exaggerated claims or conclusions or fail to identify the assumptions made in arriving at these conclusions,

• be harmful to the interests of the public, Heritage and or their Registered Representatives, RESPDAC members and/or their Registered Representatives,

• go against any applicable legislation or any guideline, policy, rule or directive of any regulatory authority having jurisdiction over Heritage,



6.2 Client Communications 6• be inconsistent or confusing with any information

provided by Heritage or the Registered Representative through any notice, statement, confirmation, report, disclosure or other information given to a client by Heritage or a Registered Representative under Heritage rules and policies,

• use other corporate names, trade names, or logo, possibly causing uncertainty or confusion about the services available through Heritage and/or the Registered Representative,

• contain guarantees regarding employment, income, yield, investment returns, and return of capital or risk or future Educational Assistant Payment (EAP) values, or

• make references that suggest that the Dealer, the Plan or the Registered Representative is connected to, offered or endorsed by the federal government or any other government body.

Faxes, emails and other correspondence from clients that are addressed to a Registered Representative and sent to Home Office, Branch or Sub-Branch may be subject to review.

6.2.2 Client Files

When a client communicates with a Branch Office in writing, Registered Representatives or Branch Office staff must provide a copy of that written communication to Home Office promptly, including responses from Heritage to be included in the client’s electronically stored file. These files are stored by Home Office and made available to Registered Representatives through Heritage’s rep.com website.



6.3 Marketing Requirements and Disclosure66.3 Marketing Requirements and Disclosure

6.3.1 Ability to Make Sales Communications

Registered Representatives may use sales communications (such as marketing materials) about Heritage products but only in accordance with this manual and providing that the Branch Manager and Corporate Compliance have approved the sales communication before its use.

6.3.2 Media Policy

Any Registered Representative, Branch staff or employee that is contacted by a media person (newspaper, radio etc.) should direct those individuals to senior management at Home Office. Under no circumstances should any Registered Representative, Branch staff or employee contact any media personality or media outlet to arrange for media events, interviews or spokesperson opportunities for themselves or others in their agency in any way that could be perceived as acting on behalf of Heritage.

6.3.3 Door Knocking

Randomly knocking on doors in order to solicit, promote, sell or explain securities (e.g., the products of Heritage) is prohibited in all provinces. Registered Representatives must always make an appointment before they visit a prospect or potential client at their home.

6.3.4 Accuracy of Information

Sales communications must not:

• be untrue or misleading, or



6.3 Marketing Requirements and Disclosure 6• include a statement that conflicts with information

contained in Heritage’s annual information form or the Prospectus for the relevant products.

6.3.5 Prohibited Disclosure in Sales Communications

A sales communication must not compare the performance of a Scholarship Plan or relevant RESP with the performance or change of any benchmark or investment unless it:

• includes all factors that (where included), would alter the conclusions reached or implied by the comparison,

• presents data for each subject of the comparison for the same period or periods, and

• explains clearly any factors necessary to make the comparison fair and not misleading.

A sales communication for a Scholarship Plan or relevant RESP is prohibited from using performance data for any other related security as a comparison of products. Registered Representatives can only use performance data if the information relates to other similar Scholarship Plan performance data or relevant RESP product for a true comparison (i.e., the products are almost exactly the same).

6.3.6 General Performance Data Requirements

No sales communication pertaining to a Scholarship Plan or relevant RESP product can contain performance data of the Scholarship Plan or relevant RESP product unless:

• the sales communication also contains standard performance data of the Scholarship Plan and, in the case of a written sales communication, the standard performance data is presented in type size that is equal to or larger than that used to present the other performance data,



6.3 Marketing Requirements and Disclosure6• the performance data reflects or includes references to

all acceptable elements of return (see Subsection 6.3.7 below), and

• the sales communication does not contain performance data for a period that is before the time when the Scholarship Plan offered its Prospectus or when it commenced operation.

6.3.7 Performance Measurement Periods

Sales communications (except a report to clients) based on performance measurement must be calculated for the ten, five, three and one-year periods and the period since inception of the Plan. The communication must clearly identify the periods of the performance.

Any communication containing or referring to a rate of return about a specific account or group of accounts must be based on an Annualized Rate of Return. The communication must explain the method used to calculate such rate of return clearly and in detail so that the prospect or client can understand the basis for the rate of return.

6.3.8 Other Disclosure and Warnings in Sales Communications

When content contains information regarding EAPs for the Heritage Plans, return of membership fees and/or additional payments from the enhancement fund, the following statement must be displayed:

Discretionary Payments are not Guaranteed. You should not count on receiving a discretionary payment. The Foundation decides if it will make a payment in any year and how much the payment will be. If the Foundation makes a payment, you may get less than what it paid in the past. You may also get less than what the Foundation pays to Beneficiaries in other groups.



6.4 Telemarketing and Do Not Call List Policies 6When discussing the return of Membership Fees specifically, the following statements must be displayed:

If you continue with the Heritage Plans until the Maturity Date, an amount equal to 25%, 50% or 100% may be returned – see Prospectus for full details.

Other required disclosures, where applicable, include:

• “Offered by Prospectus Only”.

• When a Heritage trade name is used, then you must include: “Heritage Education Funds is the registered trade name for Heritage Education Funds Inc.”

• If the advertisement includes mention of CESG, CLB, ACES, QESI or other government programs, these must be footnoted as follows:

» “See Prospectus for full details”, and

» “Certain Conditions Apply”.

6.4 Telemarketing and Do Not Call List Policies

6.4.1 Pre-conditions that Permit Telemarketing Activity

Registered Representatives are expected to comply with the Unsolicited Telecommunications Rules, which govern telemarketing in Canada. Subscription to the National Do Not Call List (DNCL) is mandatory by law for Heritage and its Registered Representatives who do telemarketing. This includes those who hire a third party to make calls for them. Registered Representatives who engage in telemarketing must establish an appropriate contract with Heritage to ensure the terms of the subscription are understood and followed.



6.4 Telemarketing and Do Not Call List Policies 6In addition, telemarketers must ensure their own calling lists are current and accurately reflect the information in the National DNCL and the internal Heritage DNCL, which is updated regularly. All lists must be validated within 31 days of making a call to ensure that a prospect’s name does not appear on either DNCL.

Note: Making phone calls to existing Heritage clients is not considered to be telemarketing.

All Registered Representatives are required to provide the following to their Branch Manager and the Compliance Officer:

• a declaration of when a telemarketer is in use or will be in use,

• the name and contact information of the telemarketer,

• copy of the telemarketing contract or compensation agreement between the Registered Representative and telemarketer. This must include the Unsolicited Telecommunications Rules for the telemarketer to follow, and

• all telemarketing/phone scripts provided to the telemarketer (including Home Office scripts).

All the above information must be provided to and be available in the local Branch Office for reporting requirements. All scripts communicated or provided to the Registered Representative’s telemarketer must be approved in writing and documented.

Reference: For additional information on the approval process for marketing materials, refer to Subsection 6.1.4, Approval Policy.



6.4 Telemarketing and Do Not Call List Policies 66.4.2 National DNCL Rules

National DNCL Rules require Registered Representatives to make certain that any numbers they call for solicitations are not registered on the National DNCL or the Heritage DNCL. Heritage is registered to use the National DNCL, which is required for permitting telemarketing calls. Registered Representatives are permitted to engage in telemarketing activity only if the Registered Representative has first entered into a written agreement with Heritage.

Unsolicited calls may not be made to those on the DNCL unless express consent has been provided by the prospect in an “auditable” format (i.e. in writing) stating he/she may be contacted for a defined purpose by the telemarketer or by Heritage.

The National DNCL Rules do not apply for telecommunication made to a person:

• if the person making the telecommunication, or the person or organization on whose behalf the telecommunication is made, has an existing business relationship (up to 18 months following the termination of their Plan), and

• who has not made a do not call request.

Important: Use of the National DNCL or any portion of it for Heritage business purposes is for the exclusive use of “authorized” Registered Representatives and may not be sold or redistributed.

6.4.3 DNCL Verification and Reporting Requirements

Each Registered Representative is required to do the following when acting on leads from any source:

• all leads obtained must be verified against the National and Heritage DNCLs through SalesTree prior to contacting the prospect regardless of the source of the lead,



6.4 Telemarketing and Do Not Call List Policies 6• any prospect who does not wish to be called by anyone

representing or affiliated with Heritage must be added to the internal Heritage DNCL through SalesTree within 48 hours, and

• all telemarketing activity must be supported by effective due diligence to ensure that all leads are checked for verification against the National and Heritage DNCLs.

All Registered Representatives in conjunction with their third party telemarketers (if applicable) are responsible for making sure that this verification process is followed.

Important: A prospect’s request not to be called must be added to the internal Heritage DNCL without delay. The prospect must not be asked to call elsewhere to make their request.

6.4.4 General Telemarketing Requirements

Calling, faxing or Automatic Dialing - Announcing Devices (ADAD) use hours are restricted to weekdays (Monday to Friday) between 9:00 AM and 9:30 PM and weekends (Saturday and Sunday) between 10:00 AM and 6:00 PM. The above hours refer to the time zone of the prospect receiving the telephone calls or faxes.

At the beginning of a call, a telemarketer must:

• identify themselves by name,

• identify the name of the Registered Representative,

• identify the Dealer, Heritage Education Funds Inc., and

• give the purpose of the call.

If asked, a telemarketer must provide the following (this is required disclosure for all contact by fax or ADAD):



6.4 Telemarketing and Do Not Call List Policies 6• a local or toll-free number for the prospect to contact

the Registered Representative or the Registered Representative’s Branch Office, or

• the name and address of the Registered Representative’s Branch Office where the prospect can write to, inquire about or make/verify DNCL requests.

When a prospect calls a telephone number provided by the Registered Representative, the telephone call must be answered either by a live person or a voice-mail system that takes messages for the prospect. The voice-mail must tell prospects that their call will be returned within three business days. The telemarketer or the Registered Representative must return the prospect’s call within three business days.

Telemarketers must display the originating calling number or an alternate number where the call originator can be reached (except when the number display is unavailable for technical reasons). Sequential dialing is prohibited (e.g., calling from an alphabetical list).

Random dialing and calls to non-published numbers are permitted, except to:

• numbers that are registered on the National or Heritage DNCLs, and

• emergency lines or healthcare facilities.

Review the following subsections for additional telephone, ADAD and fax requirements.

6.4.5 Additional Telephone Requirements

A telemarketer using a predictive dialing device to initiate telemarketing telecommunications shall not exceed, in any calendar month, a five percent abandonment rate.



6.4 Telemarketing and Do Not Call List Policies 66.4.6 Additional ADAD Requirements

In the event that the actual message relayed exceeds sixty (60) seconds, the identification message shall be repeated at the end of the telecommunication.

Persons initiating such ADAD calls shall make all reasonable efforts to ensure that their equipment disconnects within ten (10) seconds of the person receiving the call hanging up.

6.4.7 Additional Fax Requirements

A telemarketer sending a fax telemarketing telecommunication must clearly provide the required information listed above in Subsection 6.4.4, General Telemarketing Requirements and the following additional information at the top of the first page in 12-point type or larger:

a) the originating date and time of the fax, and

b) the name and address of an employee or other representative of the telemarketer and, where applicable, the client of the telemarketer, to whom the consumer can write for the purpose of asking questions, making comments about the fax or making or verifying a Do Not Call request.

6.4.8 Proper Holding Out

Though there may be lead generating programs owned and operated by Heritage, all Registered Representatives and by extension the telemarketer, are agents of Heritage only. It is a requirement to disclose this fact at the beginning of all calls; additionally, the purpose or nature of the call must be clearly understood by the prospect. Anything short of these disclosures is considered misleading and a potential misrepresentation.



6.4 Telemarketing and Do Not Call List Policies 66.4.9 Limits on Telemarketing Activities

Telemarketers who are not Registered Representatives are only permitted to:

• identify prospective clients for referral or booking appointments, and

• follow a script that has been pre-approved by the approval of the Branch Manager and Corporate Compliance.

The person who supervises and directs the telemarketer must be a Registered Representative and must provide an approved script in writing to the telemarketer. In British Columbia, telemarketers must be a Registered Representative in order to do “cold calling”.

Telemarketers who are not Registered Representatives are not permitted to do any of the following:

• activities that are directed towards the sale or purchase of a specific security or family of securities,

• discussions with potential clients that go beyond a simple solicitation of interest in investing or making contact with a registered person to pursue a sale,

• activities in which the telemarketers receive remuneration, commission or other benefits based on sales, and

• activities in which telemarketers receive remuneration based on the number of referrals made by the telemarketers to a Registered Representative.

Important: Compensation (payment) to a telemarketer based on whether or not the Registered Representative completes an enrollment is strictly prohibited.



6.4 Telemarketing and Do Not Call List Policies 66.4.10 Express Consent to be Contacted

The Registered Representative is responsible for ensuring that the telemarketer demonstrates that valid express consent was given by the prospect to be contacted by a Registered Representative. This means consent information must be documented in an auditable (written) format, which must include the prospect’s name and the specific contact phone number to be used. A prospect may withdraw his or her express consent at any time.

Accepted forms of express consent for Heritage business purposes are:

• written consent, including a completed enrollment application form signed by the prospect giving consent to be contacted by way of telecommunications,

• oral consent that a Registered Representative can show by documenting the time, place and contact phone number that the Registered Representative was permitted to call (this being the consent that the Registered Representative received), or

• electronic consent via the Internet.

6.4.11 DNCL Records Requirement

Telemarketers or Registered Representatives involved in any “cold calling” activity are required to keep certain records related to its use of the National DNCL.

Heritage, through its Registered Representatives, is required to maintain its own internal Do Not Call list and keep such a prospect’s name and contacted phone number on the list for a period of three years and 31 days from the date of the Do Not Call request. These records must be maintained within the Branch Office and Home Office for audit purposes and if requested by Canadian Radio and Telecommunication Commission (CRTC) Complaints Investigator.



6.5 Electronic and Mail Communications 66.5 Electronic and Mail Communications

6.5.1 General Communication

Material communication must be retained for documentation purposes and safeguarded against loss and provided to Home Office for electronic storage when appropriate.

6.5.2 Heritage Fax Correspondence and Memoranda

Registered Representatives should always use a Heritage fax cover sheet that contains a confidentiality clause indicating the following:

©Heritage 2011 (edit according to the calendar year)

This facsimile may contain confidential or privileged information. If you are not the intended recipient or authorized to receive this for the recipient, you are prohibited from disseminating, using or copying the information contained in this transmission. If you receive this facsimile in error, please notify the sender and destroy any copies of it.

6.5.3 Use of Email

Registered Representatives must use only approved email addresses (i.e., heritageresp.com or heritagereee.com) for all Heritage business and client correspondence. All Registered Representatives and Heritage employees must exercise caution in the use of email and be aware of the characteristics of email, including:

• Unencrypted email sent via the Internet is not secure.

• Email messages intended for a specific individual can be forwarded and distributed to others (and edited) without the Registered Representative’s knowledge.



6.5 Electronic and Mail Communications6Registered Representatives should always use a confidentiality clause indicating the following:

© Heritage 2011 (edit according to the calendar year)

This email and any of its attachments may contain confidential or privileged information. If you are not the intended recipient or authorized to receive this for the recipient, you are prohibited from disseminating, using or copying the information contained in this transmission. If you receive this email in error, please notify the sender, delete this email and destroy any copies of it.

6.5.4 Outgoing Correspondence

Use of the Heritage logo is authorized for use only with approved Heritage email accounts.

All outgoing correspondence, (i.e., letters, faxes, emails) must be presented in a form consistent with Heritage’s corporate standards. Branch Managers should review all letters going out to clients and approve such letters by putting their initial on the file copy.

Mailings that are categorized as marketing or prospecting in nature and distributed to clients or prospects require the approval of the Branch Manager and Corporate Compliance.


Minimum Standards for Branch Offices

7.1 Branches and Sub-Branches

7.1.1 What is a Branch Office?

A Branch Office:

• is any approved office with four or more Registered Representatives,

• must have an authorized on-site Branch Manager,

• is subject to periodic visits and at least one annual Branch audits by the Compliance Officer, and

• must display appropriate signage that states the legal name under which the Registered Representative operates.

A Sub-Branch:

• is any approved office with a limited number of Registered Representatives,

• has no on-site Branch Manager, and

• is subject to the same requirements as a Branch Office including supervision/audits by an off-site Branch Manager.

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M I N I M U M S TA N DA R D S F O R B R A N C H O F F I C E S

7.2 Requirements for Branch Offices7Notes:

• All references to Branch Office include Sub-Branches unless otherwise indicated.

• The number of Representatives permitted within a location approved as a Sub-Branch is at the discretion of the Compliance Officer.

7.1.2 Registering Branch Offices

Any office space that is defined in Subsection 7.1.1 above as a Branch or Sub-Branch Office must be approved by the Compliance Officer and reported to the Registration Department within five business days of the opening of such a Branch or Sub-Branch Office. Any office space maintained by a Registered Representative outside of the approved Branch Office (e.g., commercial offices, locations in which prospective or existing clients are met or where any sales activity is conducted or set up to facilitate such activity) must be reviewed and approved by the Compliance Officer. The Registration Department will report all such matters to the Securities Commission.

If Registered Representatives are considering establishing any outside office space to conduct sales activity, they are required to seek approval to register the office as a Branch or Sub-Branch Office. A written request must be submitted to the Compliance Officer who will review the suitability and, if approved, will make or determine the necessary arrangements.

7.2 Requirements for Branch Offices

7.2.1 General

Heritage operates a number of Branches and Sub-Branches where Registered Representatives meet with


MINIMUM STANDARDS FOR BRANCH OFFICES

7.2 Requirements for Branch Offices 7clients to conduct business and maintain client files. Registered Representatives must ensure that clients clearly understand with which company they are dealing. The client may be informed through various methods, including appropriate signage and disclosure.

The use of legal names in connection with the conduct of Heritage business, i.e., business in the name of the Dealer, Heritage Education Funds Inc., or its approved trade name, Heritage Education Funds, must be followed regardless of the location of the Registered Representative’s office.

A Registered Representative may operate a Branch Office upon approval by the Compliance Officer, as a shared office with another financial services firm, whether or not an affiliation exists with that firm. In this situation, the businesses must be kept separate.

7.2.2 Physical Premises

The layout of the Branch Office must protect the confidentiality of Client information. The following requirements apply:

• The Branch Office must be of professional appearance in representing Heritage.

• Client files, Registered Representative files and related documentation must be effectively controlled, kept separate from other business records or residential environments, and must be physically secured.

7.2.3 Signage

The legal or approved trade names under which the Registered Representative and any other financial services entity (if applicable) operate must be clearly displayed in a prominent location, such as the office entrance door (interior and/or exterior) of the reception area.



7.2 Requirements for Branch Offices77.2.4 Client Records

Client files must be safeguarded against unauthorized access. Client files must not be accessible to representatives, employees or agents of another financial services entity, company or other persons not directly related to Heritage.

Reference: For additional information on client records and other Branch files, refer to Section 7.3, Branch Office Records.

7.2.5 Telephone Operations

Clients must have a clear understanding about which entity they are dealing with when they call the Branch business telephone number, the Registered Representative or financial services entity, including:

• identity of the name of the registered entity; that is, the name of the Scholarship Plan business,

• separate directory listings for each entity (if another company is present), and

• cell phone and Sub-Branch phone numbers may be permitted; however, no numbers may be used that are directly connected with an unregistered location (for example, usually a home).

7.2.6 Administrative Staff

Non-registered staff cannot “trade” or “advise” in securities as broadly defined in securities regulations. Non-registered staff may only:

• arrange appointments for Registered Representatives,

• distribute marketing materials,

• contact clients to tell them about deficiencies on application and other forms,



7.3 Branch Office Records 7• provide information on the status of the client’s Plans,

• refer prospects to a Registered Representative for further discussion, and

• mail Prospectuses, annual reports, marketing or sales materials to prospective clients.

If there is any doubt or confusion regarding a non-registered staff’s activities, the staff member and/or the Registered Representative must consult the Branch Manager.

7.3 Branch Office Records

7.3.1 General

All Branch files can be kept electronically.

These records should be maintained in Heritage’s centralized records (through rep.com) and available to the Branch Office for access and for audit purposes. Files must be kept for a period of seven years unless otherwise indicated.

Daily reviews and monthly reports must show documented evidence of Branch Manager supervision (including inquiries made, follow-up, details received, date of completion and signature confirming completion).

7.3.2 Client Files

Every client must have a file that contains a copy of:

• all enrollment forms for the client,

• all written correspondence between the Registered Representative, Heritage and the client,



7.3 Branch Office Records7• copies of any internal notes or memoranda concerning

the Client or the Client’s transactions,

• copies of any notes of conversations with the client including evidence of client trade instructions, and

• copies of any prospecting materials or referrals that led to contact with the client.

7.3.3 Trade Reviews

A trade issues or rejection log and a copy of all rejected trades must be maintained for an appropriate audit trail of all trade supervision, including:

• date(s) of rejection(s),

• reason(s) for the rejection(s),

• Registered Representative’s name and rep number,

• date(s) that the response(s) that/were received and resolution made,

• name and/or rep number of Branch Manager approving the trade, and

• documentation that shows what trades were questioned or investigated.

7.3.4 Registered Representative Files

The Branch Office must maintain a current and accurate list of all Registered Representatives in the Branch, including name, contact information, date of registration and the name of the reporting Branch Manager. Each Registered Representative file should contain:

• copies of all registration related documents,

• copies of the Candidate Information Form, resumes and related records,



7.3 Branch Office Records 7• copies of written correspondence, performance

reviews and action plans between Heritage, the Compliance Officer or the Branch Manager and the Registered Representative,

• a record of the training programs, internal meetings and information sessions attended by the Registered Representative,

• records of all client complaints, regulatory inquiries or any other complaint by a person against the Registered Representative,

• records of any warnings and disciplinary actions taken against the Registered Representative, and

• records of any civil, regulatory or criminal proceedings or notices issued against the Registered Representative.

Other supervisory files should include:

• Registered Representative/Sub-Branch review reports,

• blotters, including commission records,

• new registrant training logs,

• interaction logs, and

• meeting notes (from one-on-one meetings).

7.3.5 Monthly Reports and Blotters

The following monthly reports and blotters must be maintained for a period of three years:

• Persistency Report,

• Advance Commission and Earnings Analysis Reports, and

• monthly blotters (e.g., terminations, commission disbursements and late deposit notices).



7.3 Branch Office Records77.3.6 Complaint Files

Files must be kept for each complaint received from clients. These files must include:

• a copy of the original letter of complaint (or notes in the case of a verbal complaint),

• copies of all subsequent correspondence or phone call notes with the complainant, and

• a summary of the investigation undertaken, the findings, conclusions reached and the action taken.

7.3.7 Advertising Approval Files

Approval files must contain copies of all advertising and marketing materials submitted by Registered Representatives for review and approval by the Branch Manager and Corporate Compliance and include a copy of the written approval received from Corporate Compliance.

7.3.8 Training Files

Training files must contain copies of the training materials, training schedules, New Registrant Training Log and attendance lists for Branch-sponsored training sessions. Files should also contain evidence of completing courses or seminars related to Heritage CE Program.

7.3.9 Disaster Recovery Plan

Disaster Recovery and Business Continuity planning are processes that help you prepare for disruptive events. Every Branch Office is required to have a written Disaster Recovery Plan that is stored off-site. Any material changes to that plan must be updated and documented accordingly. The plan should be sent electronically to the Compliance Department and stored in the electronic files at Home Office in the event of a disaster in the Branch Office.


Minimum Standards for Supervision

8.1 Account and Service Requirements for Registered Representatives

8.1.1 Availability Obligation

Whether registered in a full-time or part-time capacity, Registered Representatives are required to attend sales/compliance meetings and maintain regular contact with their Branch Manager. Registered Representatives must also respond to all inquiries and requests for comments by the Securities Commission, Compliance Officer or other Registered Representatives who are in a supervisory capacity.

8.1.2 Plan Servicing Responsibility

Registered Representatives are personally responsible for the Plans under their service or control. Though other Registered Representatives are permitted to make transactions to such accounts on behalf of the Registered Representative, the Registered Representative is ultimately responsible. He or she must be knowledgeable of all applicable account activity and transactions. Any questionable transaction completed by another Registered Representative must be raised by the servicing Representative with their Branch Manager.

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8.2 Branch Managers 88.2 Branch Managers

8.2.1 Appointed Branch Managers

Heritage authorizes designated Registered Representatives to act in the capacity of a Branch Manager for the purpose of Branch Office supervision and reporting to the Compliance Officer. A Branch Manager candidate must be interviewed and approved by the Compliance Officer.

8.2.2 Branch Manager Responsibilities

The Branch Manager is chiefly responsible for all Branch Office activity, and required to understand the extent of Branch Manager responsibilities and all applicable Heritage policies. There may be periodic visits to the Branch Office, including audits conducted by the Compliance Officer. Evidence of all reviews, supporting documents and all inquiries made must be kept including date of completion, actions and responses.

The following are only some of the issues for which the Branch Manager is responsible:

Interviewing Candidates:

• Interview interested candidates and initiate the registration and training process, when appropriate.

• Review and authorize all candidates for registration for suitability and their related documentation.

Holding out Requirements:

• Ensure that each Registered Representative is aware of, and is adhering to, Heritage policies respecting “holding out”, signage, business telephone greetings, business cards and letterhead as specified in this manual.


M I N I M U M S TA N DA R D S F O R S U P E Rv I S I O N

8.2 Branch Managers 8• Ensure that adequate disclosure is being provided to

clients for those Registered Representatives who hold dual licenses.

Trade Review and New Accounts:

• Authorize the opening of new accounts and supervise all account activity in the Branch Office.

• Handle every returned or problem trade in the Branch Office.

Complaints:

• Assist in resolving client complaints.

• Forward all unresolved service issues to the Compliance Officer in writing.

Registered Representative Supervision:

• Supervise all Registered Representatives and report all changes to the Compliance Officer in writing within five business days of the occurrence.

• Report all long-term absences (14 calendar days or more).

• Maintain adequate supervisory logs of material issues, communication, training, development and other matters.

• Provide adequate product knowledge, compliance training and communicate Heritage policies to ensure that all Registered Representatives maintain an adequate level of proficiency.

• Maintain regular contact (e.g., weekly; plus monthly one-on-one meetings using the Branch Manager Facilitation Log ) with those who report to him/her.

• Additional supervision and reporting of Registered Representatives who are under terms and conditions.



8.2 Branch Managers 8• Continually monitor the supervisory processes and

ensure that the processes are functioning effectively.

• Conduct periodic reviews of Registered Representatives and Sub-Branches.

• Ensure that only registered individuals engage in registerable activity.

Conduct & Discipline:

• Ensure compliance with the RESPDAC Code of Ethical Business Conduct, applicable securities regulations and Heritage policies.

• Take corrective action when needed and maintain records of the action taken.

Marketing & Communication Approval:

• Review and obtain Corporate Compliance approval for all regional promotional material, mass marketing and client communications.

Branch Office Records & Facilities:

• Keep client records confidential and ensure the separation of files and operations.

• Provide regular Monthly Supervisory Activity Reports to the Compliance Officer.

• Provide report of significant issues encountered as they occur.

• Maintain appropriate office facilities for Registered Representatives and clients.

8.2.3 Daily Review of Account Activity

The Branch Manager is responsible for the daily review of all trade and transactional activity within the Branch



8.2 Branch Managers 8Office. The review should include criteria to detect evidence of possible breaches. The following are some examples of what might point to serious underlying problems with a client account:

• lack of suitability (e.g., clients at higher risk of default),

• excessive or inappropriate multiple Plan accounts,

• unauthorized trading (e.g., no client authorization, trading without registration, non-active/suspended license or non- registered jurisdiction),

• questionable or unauthorized changes to KYC information, Plan financial details and effective dates,

• excessive or questionable Plan changes, transfers or switching between Plans indicating possible unauthorized/inappropriate trading or lack of suitability,

• inappropriate, excessive or high risk trading,

• leveraged trades,

• violation of any internal trading restrictions, and

• otherwise anomalous trading activity.

Branch Managers are required to document all trade suitability issues or rejections.

Important: There must be closer supervision of trading by Registered Representatives who have had a history of questionable conduct, low persistency (rate of Plan retention) and/or new Registered Representatives with no history.

8.2.4 Monthly Review of Blotters

The review of accounts on a monthly basis is completed using the Monthly Reports to detect the following:



8.2 Branch Managers 8• questionable trends or irregularities in commissions,

• poor team and/or individual persistency and abnormal production,

• commission records including outstanding debt,

• high level of unit reductions, Plan defaults and terminations, and

• high number of outstanding Escrow Accounts nearing 24-month limit.

This review must be completed in a timely manner following the end of the month.

8.2.5 Branch Office Continuity Plan

The account approval and daily supervision carried out by a Branch Manager must continue in their absence. All responsibilities must be delegated to qualified and appropriately licensed individuals within the Branch Office or be assumed by the Compliance Officer on a short-term basis. This must be discussed with, and approved by, the Compliance Officer.

The approved designate is not required to be present at the Branch Office. Every Branch Office must contain the following:

• list of all Branch Managers and their direct reporting links (including their name, direct phone contact information and other business activity, if applicable),

• list of Agency (or other) designated alternative Branch Managers approved for supervisory purposes including the name of the alternate, Branch Manager phone number and contact information, and

• report of any Branch Manager and the dates of their extended absences (five business days or greater) from the Branch Office.



8.2 Branch Managers 88.2.6 Delegation of Procedures

The Branch Manager who reviews and signs trades and new business documentation should be the same Branch Manager who is ultimately responsible for the supervision of the Registered Representative. Tasks and procedures, but not responsibility, may be delegated to a knowledgeable and qualified individual.

Plans opened by a Branch Manager should be reviewed by another Branch Manager. If there is no other Branch Manager, all such Plans will be reviewed by the Compliance Officer.


Special Client Matters

9.1 Anti-Money Laundering and Terrorist Financing Policy

9.1.1 General Requirements

The Compliance Officer is responsible for all matters concerning acts, or attempted acts, relating to Proceeds of Crime (Money Laundering) and Terrorist Financing, collectively called AML (for Anti-Money Laundering). All related matters must be reported to the Compliance Officer without delay for guidance, determination of appropriate action steps and reporting.

9.1.2 Objectives of the AML Policy

The objectives of Heritage’s AML Policy are:

• to comply with the requirements of Proceeds of Crime and Terrorist Financing Act, and

• to prevent Heritage and their stakeholders including shareholders, employees, Registered Representatives, Subscribers, Beneficiaries and affiliates from being misused in connection with money laundering and terrorist financing activity.

This policy establishes a general framework and guidelines to identify, prevent and report any matters arising therein to the Compliance Officer.

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S P E C I A L C L I E N T M A T T E R S

9.1 Anti-Money Laundering and Terrorist Financing Policy 9 9.1 Anti-Money Laundering and Terrorist Financing Policy

9.1.3 What is Money Laundering?

Money laundering is any act or attempted act to disguise the source of money or assets that is obtained from criminal activity. This is the process of turning dirty money – produced through criminal activity – into clean money. There are three recognized stages in the money laundering process:

• Placement involves placing the proceeds of crime in the financial system.

• Layering involves converting the proceeds of crime into another form by creating a series of financial transactions to disguise the audit trail and the source of funds (e.g., transactions such as the buying/selling of stocks, commodities or property).

• Integration involves placing the laundered proceeds back in the economy to create the perception of legitimacy.

9.1.4 Methods of Money Laundering

There are many methods to launder money. A few of the common ways that money is laundered includes:

• Use of family members, friends or associates who are trusted within the community and who will not attract attention to conduct transactions on their behalf.

• Use of inconspicuous individuals who deposit cash or buy bank drafts at various institutions, or one individual who carries out transactions for amounts less than the amount that must be reported to the government. The cash is subsequently transferred to a central account. These individuals normally do not attract attention because they deal in funds that are below reporting thresholds and they appear to be conducting ordinary transactions.



9.1 Anti-Money Laundering and Terrorist Financing Policy 9• Purchase of big-ticket items with cash; using the assets

but distancing themselves from them by having them registered in a friend’s or relative’s name. The assets may also be resold to further launder the proceeds.

9.1.5 What is Terrorist Financing?

Terrorist financing provides funds for illegal terrorist activity. The main objective of terrorist activity is to intimidate a population or compel a government to do something. This is done by intentionally killing, seriously harming or endangering people, causing substantial property damage that is likely to seriously harm people or seriously interfering with or disrupting essential services, facilities or systems.

The fundamental aim of terrorist financing is to obtain resources from financial support or revenue-generating activities to support terrorist activities. The sums needed to mount terrorist attacks are not always large, and the associated transactions are not necessarily complex.

9.1.6 What are Suspicious Transactions?

Suspicious transactions are financial transactions in which there are reasonable grounds to suspect that they are related to money laundering or a terrorist activity financing offence.

“Reasonable grounds to suspect” is decided by what is reasonable in this circumstance, including normal business practices and systems within the Scholarship Plan industry. Odd transactions by themselves do not mean an offence has occurred or will transpire. Registered Representatives must discuss such matters with the Compliance Officer if they have questions or doubts about any transaction.




9.1.7 How to Identify a Suspicious Transaction

Transactions, large or small, may give Home Office employees, Branch staff and/or Registered Representatives reason to suspect that they are related to money laundering or terrorist activity financing. The following are only a few examples of common indicators that may point to a suspicious transaction (always contact the Compliance Officer for guidance before drawing conclusions):

• Client admits or makes statements about involvement in criminal activities.

• Client is reluctant to provide sufficient identification when account is opened.

• Fake and fraudulent documentation is provided with the enrollment application to open a Plan with large sums, and the Plan is terminated in a short time.

• Use of P.O. boxes, requests to hold mail or send it to an alternative address.

• Unknown third party involvement in investments.

• Opening accounts in other people’s names (i.e. other than immediate family members including having more than two Subscribers).

• Client’s commitment to a contribution schedule that do not support his/her declared income level on the enrollment application.

• Personal cheque drawn on a Registered Representative’s or another party’s personal account.

• Un-personalized cheque received on behalf of a client, i.e. no name or address printed on the cheques.

• Frequent use of money orders and bank drafts as well as contributions coming from various financial institutions.



9.1 Anti-Money Laundering and Terrorist Financing Policy 9• International remittances, especially from the

countries identified by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), e.g. Iran, North Korea.

• Cash contributions (care should be exercised for Subscribers in some countries, where cash transactions are the norm, e.g. some Caribbean countries).

• Conversion of a Plan to lump sum by a large deposit.

• Cheque received resulted in significant over-contribution (above limit).

• Maturity cheque requested to be issued in the name of a person other than the Subscriber or Beneficiary.

• Stated occupation of the client is not in keeping with the level of income disclosed in the enrollment application or type of Plan.

• Reactivated Plans containing a minimal sum suddenly receives a deposit or series of deposits followed by an early termination for refund.

• Multiple deposits are made to a client’s account by third parties and subsequently withdrawn by early termination.

• Plan starts with a significant initial deposit and is either terminated within 60 days or after a short period of time resulting in return of the principal.

• Plan starts at a very late age. Large sums are contributed to take advantage of EAPs and grants, and getting all back in a short timeframe.

• Pre-Authorized Debit (PAD) information is that of the Registered Representative or any other person instead of the client.

Reference: To see FINTRAC’s Suspicious Transactions Guidelines or advisories about countries that require




enhanced due diligence, refer to the FINTRAC website: www.fintrac-canafe.gc.ca.

9.1.8 Controls

The following framework should be followed by all Home Office employees, Branch Office staff and Registered Representatives.

Clients and Beneficiaries

• Ascertain the identity of both client and Beneficiary and obtain evidence of an acceptable form of identification (as outlined in Subsection 3.1.2, Acceptable Forms of Identification).

• Complete all information required on the enrollment application form.

• Monitor transactions in client’s account on an ongoing basis to identify suspicious transactions in light of the examples in Subsection 9.1.7 above and report to the Compliance Officer as necessary.

Registered Representatives

• Ascertain the identity of a new applicant (refer to Subsection 3.1.2, Acceptable Forms of Identification).

• Run credit and background checks.

• Check references.

9.1.9 Training

Appropriate steps must be undertaken to train Home Office employees, Branch staff and Registered Representatives to comply with AML.



9.1 Anti-Money Laundering and Terrorist Financing Policy 99.1.10 Reporting Suspicious Transactions

Registered Representatives, Branch Office staff and Home Office employees are required to follow the reporting procedures relating to the commission of money laundering offences:

• report suspicious transactions to their supervisors or Branch Managers immediately.

• Written reports must be submitted with documentation to the Compliance Officer to review and investigate the suspicion, documenting their findings.

• Information in the report must include, but is not limited to the following:

» client information,

» transaction information,

» business or corporation information,

» third party information,

» description of suspicious activity, and

» action that was taken.

At their discretion, the Branch Manager and/or Compliance Officer may question Registered Representatives, Branch Office staff and Home Office employees about accounts and/or transactions that may not have been identified as suspicious. All “attempted” suspicious transactions (those that did not get completed) must also be reported to the Compliance Officer.



9.2 Complaint Handling9 9.2 Complaint Handling

9.2 Complaint Handling

9.2.1 What is a Complaint?

A complaint is a written or verbal grievance by a third party (client or other person) against Heritage, one of its Registered Representatives or any of its Home Office employees or Branch staff. A complaint will generally be one of the following:

• a specific grievance against Heritage or a Registered Representative,

• the prospect or client has experienced real or potential harm because of the actions, lack of actions or incomplete information provided by a Registered Representative or an employee of Heritage (e.g. misconduct, lack of full disclosure, etc.), or

• when a request is made by the complainant for remedial action.

Heritage and Registered Representatives must document and effectively and fairly respond to every complaint, not just those relating to possible violations of securities regulations. Registered Representatives and staff are required to immediately report all complaints they receive to the Compliance Officer in writing within 48 hours.

9.2.2 Dispute Resolution Services

If complaints or disputes relating to suitability of investment advice or transaction disputes are not resolved to the client’s satisfaction, Heritage uses the services of the Ombudsman for Banking Services and Investments (OBSI) to resolve the dispute. Heritage or the Registered Representative must act as soon as practicable and do the following:



9.2 Complaint Handling 9• if the prospect or client is dissatisfied with the

resolution, inform them of the OBSI service available to resolve the dispute, and

• inform the prospect or client how to use the dispute resolution service.

In Quebec, a complainant must be informed in writing that if they are dissatisfied with the outcome of the investigation, they can request a copy of their file to be forwarded to the Autorité des marchés financiers (AMF) for examination.

9.2.3 Requirements for Complaint Handling

Heritage responds in writing to any prospect or client who complains about the Dealer or one of its Registered Representatives. Corporate Compliance must first acknowledge receipt of the complaint in writing within five business days. Heritage strives to resolve all complaints within three months (90 days) or less and will provide a letter of the resolution to the complainant.

Registered Representatives are prohibited from contacting the client who made the complaint unless asked by the Compliance Officer or designated staff. The Compliance Officer or designated staff are required to:

• interview the prospect or client who complained to get further facts,

• interview the Registered Representative, and

• interview the Branch Manager.

Heritage and the applicable Branch Manager must keep records of all complaints including the following information for each complaint:

• date of the complaint,



9.2 Complaint Handling9• complainant’s name,

• name of the person who is the subject of the complaint,

• nature of the complaint, and

• date and conclusions of the decision made about the complaint.

9.2.4 Participation in the Resolution Process

Registered Representatives are required to participate in the complaint resolution process if Heritage asks them to do so. This may include:

• an interview with the Compliance Officer or designated staff about the complaint,

• providing written documentation to Heritage to support the Registered Representative’s understanding of the facts, and

• providing Heritage a copy of the client’s file, communication log and other relevant documentation.

9.2.5 Reporting Complaints

All written and verbal complaints, and any possible legal actions that may occur, must be reported to the Branch Manager and Compliance Officer immediately. The Compliance Officer will inform Corporate Compliance of all complaints received. Registered Representatives may be required to provide written statements to the Compliance Officer and/or participate in interviews. General cooperation in the investigation is required. Under no circumstances may Registered Representatives make private settlements or agreements with prospects or clients.


Appendix

Code of Ethical Business Conduct

1.1.1 I. Preface

The following Code of Ethical Business Practices has been developed and adopted unanimously by the member firms (Members) of the Registered Education Savings Plan Dealers Association of Canada (RESPDAC).

This Code concerns each Member’s dealings with:

• The public

• Potential RESP Subscribers

• Existing and former RESP Subscribers

• Other Members of RESPDAC

• All other RESP providers

• Provincial and federal Governments and regulatory agencies.

This Code reflects the commitment of RESPDAC and its Members to ensure that:

• a culture of compliance and mutual cooperation exists within each Member;

• each Member upholds the rules and regulations established by Federal and Provincial Regulators; and

• each Member is dedicated to serving its Subscribers and their families in the most positive and ethical way.

A


A P P E N D I x

Code of Ethical Business Conduct AMembers have agreed to abide by this Code in conducting themselves as a firm and have agreed to ensure that their Sales Representatives and other employees and agents also are aware of, and abide by the Code. The Code will be updated as necessary from time to time, and as approved by the Board of Directors. Members will abide by any such updates.

1.1.2 II. Definitions

“The Association” and “RESPDAC” mean the RESP Dealers Association of Canada.

Three firms are Members of RESPDAC:

• C.S.T. Consultants Inc.

• Heritage Education Funds Inc.

• USC Education Savings Plans Inc.

“RESP” and “Scholarship Plan” refer to a group Registered Education Savings Plan, as administered, marketed and sold by Members of RESPDAC.

“Member” means a member firm of the Association, and includes its employees, client service personnel and Sales Representatives across Canada. “Client” means an existing Subscriber (Plan holder). “Prospect” means a potential client, generally identified and initially contacted by a Member’s Sales Representative.

1.1.3 III. Guiding Principles

All Members, their employees, agents and Sales Representatives, will adhere to this Code.

Members may use the Association logo and report that they are members of the Association. No other firm, person or entity is permitted to use the Association


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Code of Ethical Business Conduct Alogo and state either directly or indirectly that they are members of the Association.

The corporate behaviour of a Member, and that of its employees and agents, including Sales Representatives, reflects on other Members of the Association, and on the integrity of the group RESP industry.

Members will at all times deal fairly, honestly and in good faith with Clients, Prospects and the public.

Members will at all times act cooperatively and responsibly with other Members of the Association, competitors in the financial services sector, regulatory agencies and other stakeholders in the RESP industry.

Members will strive at all times to manage their businesses in compliance with federal and provincial regulations, and participate actively in the development of regulations governing group RESPs and administrative processes.

Members will not denigrate any other Members, RESP providers, or financial institutions.

Members’ advertising and promotional statements will be truthful and accurate.

Members will not use misleading, deceptive or aggressive methods of Client solicitation that demonstrate poor business practice.

Members will comply with all training and examination requirements mandated by RESPDAC, including those mandated for Sales Representatives.

1.1.4 IV. Standards

A. Members Act in Good Faith with Clients

Members will deal fairly, honestly and in good faith with Clients. Sales Representatives of Members will


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Code of Ethical Business Conduct Aalso deal fairly, honestly and in good faith with Clients. A Sales Representative will provide objective and impartial information to Clients and prospects to enable them to make informed decisions about investing in group RESPs. Sales Representatives will make recommendations to Clients and prospects objectively, impartially and in a professional manner, without considering their own personal interest in any proposed investment, including remuneration that may result from completion of the transaction.

B. Members Act in Good Faith with Each Other

As befitting a professional association, Members of RESPDAC will deal fairly, honestly, cooperatively and in good faith with each other, and with other dealers in the RESP industry. Members will not entice or solicit Sales Representatives or other employees from other Members, in an attempt to recruit staff or Sales Representatives. Initial efforts will be made to resolve disagreements and disputes in an informal manner. Members will participate actively and cooperatively in RESPDAC affairs.

C. Compliance with Laws

A Member, and any person acting on behalf of the Member, will comply with the laws and regulations governing the business of the Member in each jurisdiction in which they operate. Sales Representatives will be registered, properly trained and in good standing with appropriate regulatory bodies, prior to interacting with Clients or prospects.

A Member and any person acting on behalf of the Member will also adhere to the compliance standards established by that particular Member.

D. Training and Proficiency

Competence requires attaining and maintaining an adequate level of abilities, skills and knowledge in the


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Code of Ethical Business Conduct Aprovision of professional services. Sales Representatives of a Member will complete internal training, and study and pass the RESPDAC Sales Representative Proficiency Course, before being registered for trading in Scholarship Plans. The examination is accredited by RESPDAC and authorized by the Canadian Securities Administrators. Sales Representatives will also ensure that they are up to date on product knowledge, and current market and regulatory requirements.

E. Supervision and Supervisory Proficiency

A Member’s supervisory personnel, including its senior officers and managers, both corporately and in field Branch offices, will make employees and Sales Representatives under their supervision aware of and comply with this Code as well as with the laws, regulations, guidelines and compliance standards related to their specific activities.

A Member’s supervisory personnel who have been designated by the Member as responsible under securities laws for supervising the activities of Sales Representatives will take the RESPDAC Branch Manager Proficiency Course and achieve a passing grade on the examination, prior to taking on these roles for the Member.

Members will monitor that their other employees and agents, and outside service providers whom they may engage, comply with this Code.

F. Corporate Responsibility

A Member is responsible for the acts and omissions of its Sales Representatives, other employees and agents engaged in carrying out its business.

G. Conflicts of Interest

A Member must be aware of the possibility of conflicts of interest arising between the interests of the Member or its Sales Representative, and the interests of a Client


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Code of Ethical Business Conduct Aor Prospect. Members will seek to avoid any conflict of interest; however, if and when a Member or a Sales Representative becomes aware of any conflict or potential conflict of interest, he or she will immediately disclose such conflict or potential conflict of interest to the appropriate supervisor or senior management of the Member, and the Member will take appropriate action to manage such conflict in the Client’s or prospect’s interest.

Any conflict or potential conflict of interest that arises will be disclosed in writing to a Client or prospect by the Member, or by the Sales Representative as directed by the Member, as soon as practically possible and in any event, prior to the Member or Sales Representative proceeding with any proposed transaction involving the Client or the prospect.

1.1.5 V. Approaching Prospects/Clients

A. Privacy

A Member and its Sales Representatives will not be intrusive when dealing with Clients or prospects. The right of a Client or prospect to refuse further discussion or interaction with the Member or its Sales Representatives will be scrupulously respected. Members and its Sales Representatives will only contact Clients or prospects during reasonable hours, and in appropriate locations.

B. Telephone Solicitation

Members will conduct their sales activities in accordance with applicable legislation including the Competition Act (Canada) (Bill C-20), the Telecommunications Act (Canada) (Bill C-37), Personal Information and Electronic Documents Act (PIPEDA) and applicable provincial privacy legislation.


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Code of Ethical Business Conduct AMembers will comply with the national Do Not Call regulation and will ensure that their Sales Representatives also comply with that regulation.

Members will not make false or misleading statements to Clients or prospects. A Member or a Sales Representative will provide fair and reasonable disclosure at the beginning of each telephone communication with a Client or prospect which includes the identity and role of the person and the Member on whose behalf the phone call is being made.

C. Gifts

Members will not promise any free gifts or benefits if a Client invests in a Group RESP, other than those of a nominal value.

D. Advertising

All representations made in Members’ advertisements will be truthful, balanced, clearly written and not misleading. The factual basis for claims, including performance claims, will be made available to the Client or prospect upon request. All claims will be based on supportable facts and consistent with the disclosure contained in the Prospectus of the particular Group RESP.

No advertisement will contain false or exaggerated statements or misrepresentations. No advertisement will contain guarantees regarding income, yield, investment returns, risk or future values. Past performance of a Group RESP will be calculated in accordance with applicable securities regulatory requirements.

1.1.6 VI. Presenting to Prospects/Clients

A. Disclosure

A Member will provide full, true and plain disclosure to Clients and prospects in presenting information about a Group RESP at all times. Disclosure will be consistent


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Code of Ethical Business Conduct Awith the information contained in the most recent financial statements, Management Reports of Fund Performance and the Prospectus of the applicable Group RESP. Members will deliver the most current approved Prospectus prior to or at the time that a Client enters into an agreement to invest in a Group RESP.

Members will accurately and completely describe the fees that are payable by the Client before the Client completes his or her contract to invest in a Group RESP. In particular, the enrollment fees will be brought to the attention of the Client, along with the implications for the Client if he or she prematurely terminates the contract.

B. Accuracy of Information

Members will not, in the course of a sales presentation, or completion of the sales contract with any Client or prospect, make any statement or take any measures which, directly or by implication, omission, ambiguity or exaggeration, would have the reasonable potential of misleading the Client or prospect about the terms of the investment. A Sales Representative will not commit to a future value for the Group RESP being invested in, nor hold out enticements, which may cause a Client or prospect to invest beyond their financial capability.

C. Jurisdiction

A Member will advertise services and Group RESPs offered by the Member only in those provinces and territories where the Member and the Group RESP are authorized to so distribute and offer that Group RESP. A Sales Representative will not carry out any dealing or trading activity in a province where he or she is not registered as a Sales Representative.

D. Suitability/Know Your Client

A Member will determine the general investment knowledge, investment needs, financial circumstances,


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Code of Ethical Business Conduct Aaffordability and objectives of each Client and ensure that every recommendation and proposed investment is appropriate and suitable for the Client. The persons responsible for supervising trades made by a Member’s Sales Representatives will review the information about the Client collected by the Sales Representatives. The Member will maintain records of this information.

E. Expectations

A Sales Representative will endeavour to ensure that a Client understands what the Sales Representative and the Member will provide in any transaction, as well as their ongoing relationship once the Client enters into an agreement for a Group RESP.

1.1.7 VII. Post-Contract

A. Transferring of Business

A transfer by a Client out of one Member’s Group RESP to another Member’s Group RESP, where the Client has been enrolled for more than 60 days in the first Member’s Group RESP, may not be in the best interests of the Client, given the potential for forfeiture of the fees paid by the Client, and accrued interest. Accordingly, a Member and its Sales Representatives will not encourage the transfer of a Client’s business from one Member to another Member.

If a Client decides to transfer from one Group RESP to another Group RESP, the receiving Member will require the Client to acknowledge in writing the financial implications of such transfer, using the Plan Transfer Disclosure Form endorsed by RESPDAC, a signed copy of which will be provided to the sending Member. In addition, the receiving Member will ensure that the Client fully understands the implications and costs of such transfer before entering into an agreement to so transfer.


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Code of Ethical Business Conduct AB. Confidentiality

Members will treat all personal information of Clients as confidential, applying proper safeguards to protect this confidentiality. Members will maintain tight control over access to Client information.

A Member will not disclose a Client’s personal or confidential information, except with the Client’s written consent, or in accordance with applicable laws; and will not use that information to the detriment of the Client or to obtain advantage for themselves or for another person.

A Member will develop and maintain written policies and procedures relating to confidentiality and the protection of Client information.

C. Claims about Competitors

A Member and its Sales Representatives will not, directly or indirectly, make comments of any kind which are false, misleading, inaccurate or incomplete about another Sales Representative, another Member or any other organization, product, or service.

A Member will be objective and fair in any discussion of any competitors, their Sales Representatives or their competing products, and will not make derogatory statements. A Member will present balanced and accurate information.

The Sales Representatives of a Member will only use written product information about the Group RESP published or approved by the Member, when discussing the RESPs of the Member or of any competitor.


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Code of Ethical Business Conduct A1.1.8 VIII. Failure to Comply with this Code

A. Responsibility

All employees, Sales Representatives or officers of a Member have a duty to report to the Member’s Compliance Department any contravention of this Code of which they become aware, and to co-operate with senior management of the Member in the investigation of possible breaches of the Code.

Any perceived breaches of this Code, together with all supporting information, will be reported to the Compliance Officer of the Member. Members in breach will rectify breaches of this Code as quickly as possible, and where required or appropriate, notify any organization to which it reported such breach, about the action taken as appropriate.

B. Consequences

The failure of a Member or any of its employees or Sales Representatives to comply with this Code may result in the Company’s suspension or expulsion from the Association. Failure to comply with certain sections of this Code may also be a violation of securities laws and may subject the Member and its Sales Representatives to applicable enforcement action and penalties.

It is expected, however, that no serious breaches of this Code will occur that would warrant suspension or expulsion, and that the collegial and cooperative manner that has been the hallmark of RESPDAC will continue to be applied to all matters of mutual interest, competition and/or disagreement.


2005 Sheppard Ave. E., Suite 700 Toronto, ON M2J 5B4

Phone 416.758.4400 Toll Free 1.888.438.3403 Fax 416.502.2555

Email [email protected]

www.HeritageRESP.com

Heritage LAYOUT 05-11 · Heritage Education Funds Inc. (“Heritage”) is a Scholarship Plan...

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