Two of the four regulators in this year’s Regulators’ Report Card are doing a much better job of communicating with dealers by providing faster response times, clear and concise policy bulletins and information workshops for registrants.
The Toronto-based Mutual Fund Dealers Association of Canada (MFDA) and the Vancouver-based B.C. Securities Commission (BCSC) garnered the top scores in three of the survey’s categories that focus on communication: “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” – a new question added to the Report Card this year.
In particular, the MFDA, which had been at the lower end of communications-related ratings in previous years, had some of the biggest improvements in its communication scores, especially in the timeliness of its response time, which rose to 7.9 from 7.2 last year. Compliance officers (COs) and other executives with member firms spoke about being better informed and having greater access to the regulator for relevant answers.
“Over the past few years, the MFDA seems to be more open to talking,” says a CO with an Ontario-based mutual fund dealer.
Adds another CO with a firm in Ontario that’s also regulated by the MFDA: “I emailed them a question and received a response within three minutes.”
No surprise to the MFDA
The improved ratings for the MFDA isn’t surprising, as the self-regulatory organization has spent a significant amount of time over the past year on improving the dialogue with its members.
“The message to our members is that we are a resource [for] them,” says Mark Gordon, the MFDA’s president and CEO. “If there are any questions on how they can comply or how they can be doing something differently, they can come talk to us.”
In fact, any MFDA member can pick up the phone and access any of the regulator’s top-level executives if they need to, Gordon says, and everyone at the organization tries to get back to a member within 24 hours. As well, the MFDA recently started to host lunch-and-learn sessions that COs can attend to learn more about the enforcement process.
Adds Gordon: “Letting our members know that we are opening the lines of communication even more so today is a message we give out at every opportunity.”
The BCSC also is doing a solid job of providing its registrants with top-notch communication. The provincial regulator was rated at 8.4 in the timeliness of its response category, up from 7.2 last year, and was given a 7.7 rating for how useful those responses are.
“[The BCSC] is on the ball,” says a CEO with a mutual fund dealer in British Columbia. “They get back to you quickly with an answer to your question.”
In fact, the regulator sets a maximum response time of 24 hours to ensure the turnaround on any inquiry is a timely one. Says Sandy Jakab, director of capital market regulation with the BCSC in Vancouver: “Of course, we don’t always achieve that. People might be sick or get booked up. And every once in a while, we have an avalanche of requests coming in. But we strive to hold ourselves to that 24-hour return phone call strategy.”
Room for improvement
In addition, the BCSC has implemented a plain-language policy in both written and verbal communication that apparently resonates very well with registrants.
“We train our staff pretty intensely when they join us and provide regular [ongoing] training,” Jakab says. “It’s been a strong value at the commission for the entire time I’ve worked here.”
Meanwhile, registrants with the Ontario Securities Commission (OSC) and the Investment Industry Regulatory Organization of Canada (IIROC) were not quite as happy. In fact, both those Toronto-based regulators have their work cut out for them. The OSC had the biggest decline among the scores related to response time, down to 6.2 from 6.6 last year. IIROC saw its rating in that category drop to 6.4 from 6.7.
“They give very mixed messages about their priorities,” says a CO with an Ontario-based exempt-market dealer about the OSC.
Despite the lower ratings, the OSC is trying to obtain feedback from its registrants. Recently, the regulator sent out an issues-based survey designed both to solicit feedback on issues of concern and inform registrants about an ongoing outreach program.
In a written email response, the OSC stated that the responses to the survey thus far have been positive. The information collected will provide the regulator with direction on how to interact and engage with the dealer community better.
Similar issues with giving mixed messages were heard from investment dealers about IIROC.
“Ambiguity is the biggest problem with its responses,” says a CO with an Alberta-based investment dealer. “They are so careful about what they say, you feel left without any real guidance.”
But Susan Wolburgh Jenah, IIROC’s president and CEO, says that explaining the regulator’s policies is part of the staff’s responsibility: “We are obligated, when people phone us, to explain what our rules mean. We have to have the ability to do that, and we must be able to articulate what the [rules] mean.”
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