Several weeks ago, it was reported that a prominent investor advocate reacted strongly to a recent OSC decision not to publish an annual statement of priorities this year. This advocate was also concerned about the OSC’s accommodation of remote-based wealth operations during Covid-19, and the OSC’s further delay to finding a remedy to the treatment of DSC mutual funds. The advocate argued that a shift from the OSC’s rule-making exercise is tantamount to a reduced priority on investor protection.
Investor advocates should be applauded for keeping a close eye on the complex securities regulatory landscape to look out for the interests of individual investors. However, more rules do not necessarily translate to better protection or a better investor experience.
In November 2018, the OSC formed the Burden Reduction Task Force to enhance the competitiveness of Ontario capital markets by saving time and money for market participants, including investors, while maintaining the core focus on investor protection. Additionally, the delay to implement the CSA’s client-focused reforms (CFRs) has encouraged the industry to develop revised policies and procedures, and introduce new practices and conduct related to the CFRs’ heightened KYC and suitability obligations. These efforts have contributed to improved standards of investor protection.
Additionally, the recent efforts by regulators to relieve the regulatory burden for advisors and firms has given more financial leeway to invest in technology and systems, to improve compliance requirements to and enhance business offerings. This enabled dealers to quickly and effectively meet the needs of investors during the Covid-19 crisis, and to monitor portfolios and make timely decisions in fast-moving turbulent capital markets, contributing to improved portfolio performance and investor confidence. Going forward, remote client access will improve productivity of the wealth business and result in better investment results for clients.
Any assessment of the regulators and the regulatory process should consider efforts to improve the efficiency of regulation. If the aforementioned investor advocate had taken a broader perspective to measure regulators’ actions to influence the welfare of investors, his conclusion may have been more positive.
Ian Russell is president and CEO of the Investment Industry Association of Canada, the national association representing the position of Investment Industry Regulatory Organization of Canada-regulated dealer member firms on securities regulation, public policy and industry issues.