Advocis encouraging advisors, clients to oppose commissions ban

Advocis, the Financial Advisors’ Association of Canada, is calling on advisors and their clients to contact their provincial members of Parliament (MPP) to oppose a possible ban on embedded commissions in the investment industry.

In January, the Canadian Securities Administrators (CSA) published a paper that contemplates banning embedded compensation arrangements and requiring instead that investors pay their advisors directly. Regulators are concerned that embedded structures represent an inherent conflict of interest that harm market efficiency and compromise investor protection.

Advocis opposes the idea of banning embedded commission structures and is now calling on advisors and clients to join its lobbying effort by contacting their local MPP. The group has launched an initiative that asks both advisors and their clients to visit its advocacy website, which provides a tool that enables them to join its campaign by asking MPPs to raise the issue with the ministers responsible for securities regulation in different jurisdictions who oversee the various members of the CSA.

The association argues that banning embedded commissions would reduce access to financial advice and would ultimately harm investors’ interests. Instead, it argues that advisors should be legally recognized as a profession.

Read: The end of embedded commissions?

The CSA’s paper is out for comment until June 9. In the meantime, several regulators are planning to hold in-person consultations to seek further feedback before they make a decision about whether to propose a ban, or other measures, to address their concerns.

Photo copyright: dirkercken/123RF