The investment industry’s bid for a six-month extension on the implementation of new cost and performance reports as part of the Client Relationship Model (CRM2) reforms is being opposed by investor advocates.
In comments to the Investment Industry Regulatory Organization of Canada (IIROC) on the latest version of its CRM2 reforms, the Investment Industry Association of Canada (IIAC) requested that firms be given until the end of 2016 to adopt the new reporting requirements, which are slated to take effect on July 15, 2016. The requirements for new annual reports to clients that clearly lay out the costs of investing, and better explain portfolio performance, are key features of the CRM2 reforms, which aim to improve transparency to investors.
The IIAC is seeking an extension on the implementation of those requirements on the basis that it will be confusing to clients to start reporting at an unconventional date, instead of a normal year end, or even the end of a month.
However, the Ontario Securities Commission’s independent Investor Advisory Panel (IAP) is opposing the delay.
Responding to a request from the Canadian Securities Administrators’ CRM2 Committee, the IAP says that, “we believe the request for delay is not justified and is not in the public interest.”
“While we understand industry’s desire to provide the accurate, high quality client reports that investors need and will expect, we believe that further delay to achieve these objectives is not warranted,” it says. “Canadian investors have waited long enough for disclosure of the costs and investment performance of their accounts.”
The IAP indicates in its message to the committee that it reviewed the IIAC’s letter requesting a delay, and held a conference call with IIAC staff to understand their position. But the IAP is concerned that further delay of the reforms will hamper improvements to investor protection, noting that it “has consistently expressed its serious concerns about the slow pace of reforms to strengthen Canada’s investor protection regime.”
In the future, the IAP suggests, the industry should be quicker to raise these sorts of implementation issues. “In the event that new impediments to meeting the implementation schedule are identified, industry needs to reach out earlier to investors,” it says.