A review of Ontario’s securities legislation is certainly warranted — but the exercise must be done right.
Earlier this month, the Ontario government announced in its fall economic statement that the provincial Securities Act is to be reviewed. Such a review — which is required every five years — has not taken place since 2003.
Since the five-year requirement was adopted in 1995, the 2003 review, launched in 2001, is the only one that has actually taken place, although other legislative committees have held their own inquiries.
Moreover, some of the most significant policy recommendations to come out of these previous exercises have been left to wither. The governments of the time publicly endorsed major reform recommendations, and promptly forgot them.
Securities laws have been routinely updated in the years since – often usefully. Regulators have acquired stronger enforcement powers and a civil liability regime for issuers’ financial disclosure has been introduced.
But the world has changed dramatically since the previous comprehensive review. There’s been a global financial crisis. The role of the internet is significantly different from what it was in 2003 and the investment industry has evolved.
So, is a meaningful, constructive policy review now finally going to take place? To date, the results from Ontario’s current government are not encouraging.
That government, soon after taking power last year, blundered into a long-running policy debate over mutual fund fee structures, then diverted regulators onto a mission to root out mythical regulatory burdens. In both cases, political ideology trumped sound policy and regulatory expertise.
If there’s a reason to be hopeful, it’s that this government’s ham-handed approach hasn’t been unique to the securities sector. In fact, the approach reflects the current administration’s overall governing style – a style that has been met with cratering public approval and, if the fall economic statement’s backpedalling on unpopular policy proposals is any indication, an apparent willingness to change course.
A fresh five-year review is a chance for the provincial government to prove that it has grown up and can be trusted on regulatory policy.