The Registered Deposit Brokers Association is set to become the Canadian deposit industry’s professional standards Self-Regulation Organization, the association announced on Monday.

The RDBA — an industry association that works to establish industry best practices and a strong code of ethics in the best interest of the investing public — has won support from the majority of financial institutions for its business plan to regulate independent deposit brokers.

Beginning in 2009, participating financial institutions will require each person soliciting deposits from consumers to be registered with the RDBA. Rules and regulations of the RDBA are in the process of being finalized for comment by industry participants in early 2009.

“The RDBA will greatly simplify the administration of compliance for the deposit broker industry,” said Jim Schweitzer, head of the deposit broker unit at Scotiabank and a financial institution director of the RDBA.

Across Canada, an estimated 3,500 individuals act as or on behalf of a deposit broker, helping investors find the best rates for Guaranteed Investment Certificates and other guaranteed deposit products issued by banks, trust companies and other financial institutions.

Approximately $30 billion in such deposits are placed each year through this independent broker network, and oversight is left to each financial institution’s independent effort.

The necessity for financial institutions to comply with stringent best practices and various legislative acts involving money laundering, privacy and product disclosure, places a heavy administration burden in financial institutions and imposes costs on all industry stakeholders, according to the RDBA.

The association calls self-regulation the logical next step for the industry. This would allow the cost of a common regulator to be shared instead of duplicated by every financial institution manufacturer, the RDBA says.

“The RDBA offers an opportunity to develop rules and regulations to govern conduct in the marketplace in a way that respects the realities and costs of operating, protects the deposit broker’s independence and acts in the best interest of the investing public,” said Mary Rygiel, a deposit broker director and president of the RDBA.

“By taking on this challenge, with the input of the deposit brokers who have to implement these rules, we end up with a regulatory framework that is far more business-friendly than what might occur if the task is left to isolated securities regulators.”

IE