Canadians slow to adopt fintech

Canadian investors should receive clear, upfront fee disclosure, and securities regulators should be working with robo-advisors to help facilitate the development of cheap alternatives to traditional advice, according to a draft report from the Competition Bureau.

On Monday, the federal agency released the draft report on its market study concerning technology‑led innovation in the Canadian financial services (fintech) sector in a variety of market segments, including payments, crowdfunding, and investment advice.

The report generally lauds Canadian securities regulators for their efforts to embrace the emergence of fintech but it also makes several recommendations for regulators and policymakers to consider.

“Each recommendation is aimed at modernizing the regulation of financial services to support innovation and greater competition through fintech,” the Bureau says in its announcement.

The report generally lauds Canadian securities regulators for their efforts to embrace the emergence of fintech but it also makes several recommendations for enhancing competition.

Among other things, regulators should continue to increase price transparency in the advice business. “Prices for advice should be clear and easily understood by Canadians. Fees should be presented up front (i.e. in advance of purchase) and consumers’ attention should be drawn to these fees,” the report says.

It also recommends that regulators work with robo‑advisors “on the design of regulation to facilitate entry of these low-cost alternatives to traditional advice”; and, that regulators review their rules periodically to ensure that they aren’t creating unnecessary regulatory burdens.

Additionally, the report suggests regulators examine giving firms more freedom to automate processes such as KYC and suitability analysis, and portfolio rebalancing. They should encourage the use of technology to facilitate account switching.

Elsewhere, the report makes a series of recommendations designed to facilitate the development of crowdfunding and peer-to-peer lending models, and it has suggestions for encouraging competition and innovation in the payments sector.

The Bureau is seeking feedback on the report and its recommendations by Nov. 20, and pledges to “soon release” a final report following the consultation period.

“The future is now. Let’s get it right by providing policymakers with the information they need to nurture a competitive environment that allows Canada’s fintech companies to innovate and grow globally,” says John Pecman, commissioner of competition, in a statement.

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