The Canadian Securities Administrators (CSA) issued two status reports yesterday regarding consultations on mutual fund commissions and statutory fiduciary duty. (See Investment Executive, CSA proposals for fund fees, best interest duty come together, December 17, 2013.)
Advocis says it is pleased that CSA staff have decided to further discuss and consider the information gathered before determining what regulatory actions, if any, they intend to pursue.
“This cautious and reasoned approach is the right course because there’s so much at stake. A wrong decision could have devastating consequences, so we’re relieved that the regulators are taking the time to consider all the facts,” says Greg Pollock, Advocis president and CEO.
Advocis is opposed to regulation that would ban trailer fees or impose a statutory fiduciary obligation on financial advisors and planners.
“Given the varying needs of investors, choice should be maintained – choice in the kind of compensation and the kind of client-advisor relationship that both parties are comfortable with,” Pollock explains.
Advocis fears eliminating embedded commissions would drive up the cost of financial advice, making it unaffordable for hundreds of thousands of middle-class Canadians.
It says that a commission ban in the United Kingdom could lead to an estimated 5.5 million people becoming “financial advice orphans”.
Advocis notes the situation in Australia is no better and has led the new Tory government there to consider reversing some of the reforms, including the ban on commissions.