RE: IIAC steps up best interest fight, by James Langton, investmentexecutivec.com, June 10, 2016.
The debate on whether or not to introduce a best interest standard for financial advisors brings forward many perspectives. At Advocis, it's not just about whether or not a best interest standard should be introduced, but rather the details surrounding how it should be executed.
For more than 50 years, Advocis has had a best interest standard in place for its 12,000 members across Canada. All members voluntarily adhere to the Advocis code of professional conduct, which includes acting in the client's best interest. We support an industry in which all advisors are held to a best interest duty. However, we cannot support such a standard that's applied and interpreted by a regulator that does not include advisors in its membership.
Bill 157, The Financial Advisors Act, 2014, proposed a progressive regulatory model that would have established a self-regulatory organization or profession dedicated to the oversight of all financial advisors. Establishing a profession for advisors protects investors, while holding advisors accountable.
Under the current regulatory structure, multiple bodies propose varying standards, which creates gaps and leaves Canadians at risk. We need a unified solution. Within a profession, a body that understands the client/advisor relationship would regulate advisors. This is no different than the specialized role that the Mutual Fund Dealers Association of Canada and the Investment Industry Regulatory Organization of Canada currently provide for brokers and dealers.
To move to a best interest standard and leave the oversight of advisors to the existing regulators is not a viable option. The advisor's role has evolved to the point at which the existing regulatory structure cannot support the specialized service they deliver to their clients.
Although Advocis exercises a best interest standard, we want to be clear that it's our position that only the profession itself can interpret a best interest standard.
President and CEO
Advocis, The Financial Advisors Association of Canada
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