Industry cooperation is needed to help make regulatory reforms work, to raise standards, and bolster investor confidence, says Susan Wolburgh Jenah, president and CEO of Investment Industry Regulatory Organization of Canada (IIROC).
At an industry conference in Toronto Thursday, Wolburgh Jenah announced that the regulator is republishing its proposed rules to implement the Client Relationship Model (CRM2) reforms that are scheduled to take effect in 2015 and 2016 (See CSA, IIROC spar over CRM2, investmentexecutive.com, September 18, 2014.) In her remarks, she called on the industry to help make that reform effort a success.
“CRM as a whole was originally designed to strengthen alignment in the client-advisor relationship through conflict of interest management, enhanced account disclosure and suitability assessment standards, and greater transparency for investors. Realizing the benefits of CRM requires that member firms and advisors embrace the underlying objectives of the CRM framework,” she said.
“Regulators and industry should be aligned in wanting to see investors succeed in achieving their financial goals,” she added. However, she noted that there are differences of opinion on how to get there.
“Client expectations and needs are changing. Transparency and objective, knowledgeable advice geared to an investor’s specific needs — are more critical than ever. The market is increasingly complex and investors face a vast array of advisors, products and services to choose from,” she added.
In addition to CRM, Wolburgh Jenah also touted the importance of effective dispute resolution. She noted that IIROC members have historically accepted 99% of the compensation recommendations made by the Ombudsman for Banking Services and Investments (OBSI), “the recent rise in publicized refusals by certain firms to adopt OBSI’s recommendations negatively impacts public confidence in the financial services industry as a whole.”
“An accessible, timely, independent and fair dispute resolution system, in which both investors and the industry have confidence and trust, is critically important,” she added.
On the issue of the confusing array of credentials and titles that advisors use, she noted that IIROC has issued guidance in this area. “We will determine whether further action is necessary based on firms’ responses to these initiatives and discussions with other regulators to ensure a level playing field,” she said.
Finally, the outgoing IIROC chief called for the industry’s “support, cooperation and leadership”. She concluded, “Only by working together can we collectively raise the bar, encourage higher standards of behaviour and inspire investor confidence.”