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Time and again, securities regulators have found themselves played for suckers as they allow their investor protection plans to be co-opted, distorted and delayed. Now, with several dealers defying the spirit of the client-focused reforms, have regulators finally learned their lesson? We’ll soon see.

In the coming year, the Canadian Securities Administrators (CSA) are expected to propose measures to expand the cost reporting that investors began to receive under the client relationship model (CRM2) reforms. This forthcoming project, dubbed CRM3, also will aim to harmonize the disclosure investors receive for both their securities (mutual funds and ETFs) holdings and segregated funds.

While the underlying objective of these efforts — ensuring clients receive comprehensive, accurate disclosure about the costs of investing — shouldn’t be controversial, the execution will prove challenging.

There are already rumblings from segments of the financial services industry about the complexity of the task, the expense involved and the need for prolonged transition periods.

However, the regulators will do investors a disservice and further undermine their credibility if they allow plans to get bogged down again.

The process of investor protection reform has become seemingly endless as regulators allow haggling over details, and projects that should have taken months are dragged into years-long wars of attrition. In the end, regulators find themselves disregarded anyway.

For example, the implementation of CRM2 was drawn out over years and the new rules were still met with defiance. Last year, the Investment Industry Regulatory Organization of Canada imposed a record $4-million fine on TD Waterhouse Canada Inc. after finding it made a deliberate business decision not to comply with the CRM2 requirements for certain client positions.

In the year since that ruling, several banks have made business decisions that defy the spirit of the CSA’s latest reforms by dropping third-party funds from branches and limiting clients to in-house products.

Too many times, regulators have trusted dealers to “do the right thing” for investors, only be stung by firms that prioritize their own short-term interests. When the time comes to implement CRM3, regulators must show they won’t be fooled again.