Although retail investor issues remain at the top of the Ontario Securities Commission’s (OSC) policy agenda, a renewed effort to reduce the regulatory burden is also coming, according to the regulator’s draft statement of priorities for the year ahead, which was published on Thursday.
High-profile retail investor issues remain at the top of the OSC’s list for the next fiscal year, ending March 31, 2018, including the ongoing consultation on how to address regulators’ concerns with embedded commissions in the mutual fund industry, a possible best interest standard and other proposed reforms to client/advisor relationships.
“Access to affordable, high-quality and unbiased investment advice continues to be a core investor expectation. The OSC will continue to work on key initiatives to improve the advisor/client relationship and address issues, such as incentive structures, that may hinder the alignment of interests between advisors and investors,” the OSC’s draft statement says. “Improvements to the culture of compliance in financial services businesses will remain a focus as weaknesses in these areas can result in inappropriate advice and unsatisfactory investor outcomes.”
In addition, the OSC says that it will deal withthe question of investor redress in fiscal 2018, specifically the recommendations from an independent review that the Ombudsman for Banking Services and Investments (OBSI) be given the power to make binding compensation decisions. The OSC doesn’t indicate whether that it supports that position, only that it will address the issue.
“The OBSI Joint Regulators Committee will analyze the review’s findings and recommendations, the views of OBSI’s leadership, along with stakeholder input in determining what steps the OSC or CSA should consider in response,” the OSC’s draft statement says.
Other new items on the policy agenda include plans for the OSC to step up its efforts to collect the monetary sanctions it imposes; greater outreach to potential industry whistleblowers; a new emphasis on the emerging financial technology sector; and a pledge to look for opportunities to reduce the regulatory burden along with other members of the Canadian Securities Administrators (CSA) by simplifying, streamlining, or eliminating requirements that are duplicative, unnecessary, or unproductive.
To that end, the OSC’s draft statement of priorities says the CSA plans to publish a consultation paper that will canvass the investment industry and issuers for input on ways to reduce the regulatory burden without compromising investor protection.
“Together with our CSA partners, we are seeking feedback from market participants and stakeholders to identify specific areas of securities legislation that may duplicate other requirements, may not be achieving our regulatory objectives, or where the regulatory burden may be disproportionate to the regulatory objectives that are achieved,” the OSC says.
The OSC is also examining ways to make it easier for firms to interact with regulators.
“As our capital markets evolve, our approach to regulation must adapt accordingly,” says Maureen Jensen, chairwoman and CEO of the OSC, in a statement. “Over the coming year, we intend to advance key reforms to better protect investors. We are also looking at ways to foster a regulatory environment that is less burdensome, is responsive to industry-led solutions and supports innovation in capital markets.”
The proposed policy agenda is out for comment until May 23. The OSC must finalize its policy priorities by the end of June and says it will publish a progress report on last year’s priorities sometime this spring.
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