For the sixth year in a row, Investment Executive (IE) spoke with compliance officers (COs) and executives at various financial services firms to find out what they think about both the regulators that oversee their businesses and the important changes to the regulatory environment.
This year, like last year, the list of survey participants has expanded. Instead of speaking only with COs and executives with firms regulated by the self-regulatory organizations (SROs), IE research journalist Scott Barber spoke with 107 COs and company executives, including professionals in the same positions at exempt-market dealers, investment-counselling firms and mutual fund companies – firms that are regulated directly by the provincial regulators.
Survey participants, in addition to rating their regulators on the 20 questions in the survey, also were asked to comment on certain regulatory developments in supplementary questions.
In past years, IE has included supplementary questions that resulted in editorial articles. These questions focus on the hot topics of the day. In 2012, survey participants were asked if they would like to see the creation of a national regulator. In 2013, they were asked if they were in favour of the proposal to make the Ombudsman for Banking Services and Investments the financial services sector’s sole dispute-resolution service and if they were in favour of its “name and shame” campaign.
This year, IE dove into the second phase of the client relationship model (CRM2) and the proposed statutory fiduciary duty.
Survey participants were asked three supplemental questions: “How dramatically do you expect the financial services sector to change over the next five years in response to the implementation of CRM 2 reforms mandating improved disclosure of investment costs and enhanced performance reporting?” “Would you be in favour if the Canadian Securities Administrators decided to impose a duty on financial advisors to act in the best interests of their clients?” and “How much would your firm’s business be affected if regulators imposed a duty to act clients best interests?” (See stories on page 15 and above.)
Meanwhile, to obtain the ratings for each of the 20 categories in the main table on page 15, survey participants were asked to rate the performance of their regulator(s) in each category on a scale of zero to 10, with zero meaning “poor” and 10 meaning “excellent.” An increase of half a point or more in a rating is indicated by a green number, whereas a decrease in a rating of the same margin is indicated by a red number. Participants were also asked to explain their reasons for the rating given.
To ensure the greatest accuracy, survey participants with investment and mutual fund dealers were asked to rate their SROs. They then were asked to rate their overseeing provincial regulators only if they’ve had direct dealings with those bodies within the past two years.
Following the practice established in 2013, ratings for the provincial regulators in the survey are broken out individually; for the first time, the Alberta Securities Commission joins the B.C. Securities Commission and the Ontario Securities Commission.
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