By James Langton
(November 2 – 18:00 ET) – In its comment on the proposed merger of the Ontario Securities Commission and the Financial Services Commission of Ontario, the Investment Dealers Association makes a few recommendations for the regulatory scene in Ontario.
The IDA suggests that rule making be expedited to better match the pace of the market. Most rules gets at least 90-day comment periods and 60 days for ministerial approval, and that’s after the rule is drafted. “While five months may be appropriate for complex matters, perhaps a shorter timeframe would be appropriate for routine changes.”
The IDA supports the proposed regulatory agency’s use of investigation and enforcement powers, but it cautions, “Such far-reaching powers must be accompanied by controls and procedures to ensure they are used fairly and appropriately.”
The association also makes much of the level of fiscal accountability the agency faces. It says it supports self-funding “with the caveat that there be mechanisms of governance and fiscal restraint”. It notes that the OSC spent $41.3 million in 1999/2000 and $51.5 million in 2000/2001, while collecting fees of $82.4 million and $73.1 million respectively, resulting in a surplus of $62.7 million in just two years. “In addition to the inherent unfairness, we have to confront the negative impact on the competitiveness of the Ontario capital markets.”
Although the OSC has pledged to deal with issue of surpluses, the IDA is worried that a merger might muddy the waters. “Cross-subsidization of the new regulator by one set of industry participants over another is another real concern,” it says. “Should the two organizations be lumped together under existing fee structures, the securities industry would be subsidizing the other financial sectors. Only by getting current fees in line with operating budgets can the more complicated issue of cross-subsidization be resolved.”
The IDA says that there is considerable room for efficiencies between the new regulator and the IDA, and that a merger would be a good time to address possible duplication in areas such as registration records and the handling of consumer complaints.
Although the IDA says the new agency shouldn’t look to regulate even more areas than the cobined groups already cover, it does note that the proposed financial planning proficiency regime does not extend to planners who are not selling securities, mutual funds or insurance products. “Since the provision of planning advice is an important and growing activity, it may become increasingly important to address this jurisdictional issue in the near future.”