Louis Morisset speaks to the Canadian Club in February
Louis Morisset speaks to the Canadian Club in February. Courtesy the Canadian Club

As Louis Morisset prepares to end his second term as president and CEO of Quebec’s Autorité des marchés financiers (AMF), he wants financial advisors to educate their clients and the public about the risks of scams.

Increased consumer vigilance is “the only real line of defense,” Morisset told an audience at the Canadian Club on Feb. 13.

Traditional financial literacy is insufficient, he added, saying that consumers need to “learn how to use mobile apps safely, recognize online fraud, protect their personal information, and consent to sharing [that information] in an informed manner.”

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He called upon all stakeholders in the Quebec financial industry to integrate more elements of financial literacy into their communications with their clients, “especially the younger ones.”

Morisset joined the AMF in 2006 and was appointed president and CEO in 2013. He was re-appointed in 2018, and will step down when that second term ends on July 1.

He said the internet has created a fertile ground for scams. “Fraudsters take advantage of the anonymity of the web and privileged access to our daily lives, where they can easily observe the digital trail we leave behind,” he said.

Morisset also criticized the insidious digital marketing techniques sometimes used on online trading platforms, such as gamification. “These techniques, designed to influence investors’ decision-making, can lead them to take actions that are not necessarily in their best interest, such as engaging in financial transactions that are incompatible with their investment objectives or their risk tolerance,” he warned.

He also noted that more young consumers and self-directed investors, especially those interested in cryptoassets, are learning about financial products and services on social networks, where there is a lot of misinformation and potential for undisclosed conflicts.

“Their financial decisions are thus increasingly dependent on finfluencers whose objective is often not to adequately inform their audience, but rather to generate the greatest number of views or clicks, or to financially benefit from the buzz they help create on securities or cryptoassets in which they themselves have invested,” he said.

The evolving ESG landscape

While the pandemic accelerated digital transformation, it also “triggered a real awareness of sustainable finance,” Morisset said. “The correlation between the long-term value of a company and the inclusion of ESG factors in its activities is now the subject of a broad consensus.”

He also sees that consensus around the need for carbon neutrality. “The financial sector alone will not be able to solve the climate change issue, but it plays an absolutely essential role in supporting the real economy and accelerating the necessary transition,” he said.

But Morisset also expressed concern about greenwashing as more investment funds are labelled “responsible and sustainable.” “Investors need to be able to rely on quality information to make informed investment decisions,” he said.

He also noted the importance of evolving governance practices to better reflect today’s issues — the G in ESG. “It is well-documented today that diversity, in its many aspects, fosters the expression of different perspectives and viewpoints, and helps mitigate the risk of developing groupthink on boards.”

Looking to the future

In a roundtable discussion, Morisset suggested that many challenges await his successor.

“It’s a perpetual challenge. You have to try to evolve at the same speed. It’s not easy,” he said.

He also wondered about the impact of artificial intelligence in the financial sector.

“Will it be used responsibly or will it raise ethical and discriminatory issues? We’re thinking about that,” he said.

Morisset also acknowledged the inherent imperfection in regulations and laws. “Events frequently lead us to realize that there are holes and that we need to address them with our partners.”