As the regulators that oversee the financial services sector take steps to improve two-way communication with their registrants, the compliance officers (COs) and company executives surveyed for this year’s Regulators’ Report Card indicate that some regulators are hitting the mark, while others still fail to communicate in a clear and timely fashion.
The results of the Report Card survey suggest that regulators are doing a relatively good job of keeping the lines of communication open. Compared with most other categories in the Report Card, most regulators earned higher average ratings in the three communication-related categories: “the regulator’s ability to communicate its priorities in a timely and effective manner”; “timeliness of the regulator’s response to questions and concerns expressed by registrants”; and “how useful is the regulator’s response to questions and concerns expressed by registrants.”
This improvement is most evident when looking at the ratings for the Investment Industry Regulatory Organization of Canada (IIROC) and the Ontario Securities Commission (OSC). Not only are the ratings they received from registrants for these categories higher than in the vast majority of the other categories in the Report Card, but both regulators enjoyed rebounds of at least half a point or more in all three categories this year after seeing their ratings in these categories decline last year.
Keeping firms updated
Survey participants commended IIROC for keeping registrant firms updated on news and developments, and for making IIROC staff accessible.
“Last year, they redesigned the website, making it much easier to find important things,” says a CO with an investment dealer in Ontario. “I usually follow up with [IIROC staff] if I need guidance or clarification, and it is always very helpful, no matter what level the person is at.”
IIROC earned the highest rating (7.6) of all of the regulators rated in the category pertaining to its ability to communicate its priorities in a timely and effective manner, up from 6.9 last year. This improved score probably relates to new policy priority reports that IIROC began publishing last summer, which highlight the upcoming regulatory initiatives that the regulator is planning to introduce.
“We thought that would be a really good way to focus the industry on what’s ahead [and] help them plan and prioritize,” says Susan Wolburgh Jenah, IIROC’s president and CEO. “I think that there’s an appreciation for the fact we’ve been trying to do that, and to be transparent about that.”
The OSC’s improved communication scores most likely reflect the variety of new registrant outreach initiatives that the provincial regulator has embarked upon.
“We are engaging our registrants more and more,” says Marianne Bridge, deputy director of compliance and registrant regulation with the OSC. As an example, she says, the OSC has begun to send out regular email updates that highlight news and developments, and also has been hosting periodic information sessions on key topics of interest. “We’ve had really, really positive response on those.”
In fact, the OSC has been so effective at communicating with its registrants that a chief compliance officer (CCO) with an Ontario-based investment-management firm who rates the regulator at 8.0 in the category pertaining to its ability to communicate its priorities in a timely and effective manner has trouble keeping up: “There are so many updates that cover so many topics that it is very difficult to weed through them all to find what applies to your firm.”
Next: Praise for the MFDA
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Praise for the MFDA
Communication practices at the Mutual Fund Dealers Association of Canada (MFDA) also appear to be resonating well with its registrants. In particular, the MFDA earned the top score of 8.0 in the category pertaining to the timeliness of its response to questions and concerns expressed by registrants. In large part, that’s thanks to the MFDA’s policy of returning all phone calls within 24 hours.
“Usually, the response is instant,” says an executive with a mutual fund dealer in Ontario.
Many survey participants also praised the MFDA for being approachable and accessible.
“I don’t have to send an email to a general mailbox,” says a CO with an Ontario-based mutual fund dealer. “I call the decision-makers themselves.”
Indeed, Mark Gordon, the MFDA’s president and CEO, says he encourages firms to contact him or other MFDA staff with any questions or concerns that arise: “They can pick up the phone and get me directly. They have full access to anyone at the MFDA.”
That said, some regulators have room for improvement in their communication. For example, some COs and company executives complained that it can be hard to get answer from the B.C. Securities Commission (BCSC) and the Alberta Securities Commission (ASC) – and the information received tends to be convoluted and difficult to understand.
The ASC earned the lowest ratings in all three communication-related categories for these very reasons.
“[ASC staff] often don’t respond to questions at all,” says a CO with an investment-management firm in Alberta. “They are short-staffed.”
Adds an executive with an exempt-market dealer in Alberta: “It’s all a bunch of mumbo-jumbo that you just have to wade through. It’s convoluted, and they constantly tell you to refer back to this section or that section.”
A similar experience
Dealing with the BCSC, which saw its ratings in all three categories decline by half a point or more, is a very similar experience, says a CO with an exempt-market dealer in Alberta: “[BCSC staff] provide a lot of information, but it is up to us to interpret it.”
Adds an executive with an investment dealer in British Columbia: “[BCSC staff] won’t give you a straight answer. They always have to check with their bosses; and then those people have to check with their bosses. It’s a never-ending process.”
Despite the weak performance in these categories, however, executives at both provincial regulators say they have introduced various new initiatives in the past year in an effort to improve communication with the industry – and they plan to bolster their communication practices in the year ahead.
“We actually are doing at least a couple of things that are even more intensely communicative this year,” says Sandy Jakab, director of capital markets regulation with the BCSC. For example, she says, directors at the regulator have begun visiting a sample of firms in person each year to get feedback and discuss any challenges that those firms are facing.
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