A recent C.D. Howe Institute report argues that regulatory burden is pricing modest investors out of financial advice, and proposes a simple cure: cull unnecessary rules and streamline oversight. It’s a seductive pitch. But it’s wrong.
The real problem isn’t that we regulate too much — it’s that we regulate inefficiently. The solution isn’t to abandon guardrails; it’s to rebuild how we enforce them. Supervisory technology (suptech) offers that path. Done right, it can reduce costs, eliminate duplication and improve consumer protection simultaneously. Canada should be racing toward this future, not retreating into deregulation.
Before embracing less regulation, consider what that means. Regulations exist to deter misconduct, reduce information asymmetries and preserve trust. Strip them away and you tilt the playing field toward firms with scale, risk appetite or information advantages — precisely the actors who benefit most from weak oversight.
Gary Edwards’ report treats compliance costs as fixed and irreducible, assuming they must scale linearly with firm size. But that ignores innovations in reporting, standardization and automation — many of which regulators themselves can enable. It also assumes simpler rules yield better outcomes. Yet simplified rules can be gamed, create gaps or miss critical nuance. The question isn’t whether to regulate lightly — it’s how to regulate intelligently.
Yes, provincial duplication is a problem. But duplication stems from weak interoperability, poor data standards and siloed enforcement. The fix is to harmonize data regimes and supervisory systems, not lower standards across the board.
Sup-tech is the better way
Sup-tech uses modern technology — data analytics, machine learning, APIs and automated workflows — to help supervisors monitor markets, detect risk and enforce standards more proactively and efficiently. It’s already working around the world.
The U.S. Consumer Financial Protection Bureau analyzes consumer complaint data to identify patterns and detect potential misconduct. This intelligence-driven approach lets regulators focus resources on outliers rather than imposing blanket compliance burdens on everyone.
The Bank of Lithuania has deployed electronic complaints systems and predictive analytics to triage issues and spot systemic problems. What might have required broad rule relaxations instead gets handled through sharper supervisory targeting.
Brazil’s central bank built infrastructure to supervise nonbank financial entities remotely, combining data ingestion, automated risk scoring and dynamic dashboards. This reduces duplication, lowers operational costs and enables more granular oversight of smaller players — precisely the firms Edwards worries will be abandoned.
The evidence is mounting. A Cambridge SupTech Lab survey found that 81% of financial authorities report involvement in sup-tech initiatives, with consumer protection as a leading use case. Respondents say these tools improve protection and increase public confidence.
The Bank for International Settlements argues that sup-tech converts backward-looking oversight into predictive, real-time supervision. The Financial Stability Board highlights that sup-tech helps supervisors reduce manual burden, sharpen insight and enable nimbler oversight.
These jurisdictions aren’t choosing deregulation. They’re choosing smarter regulation.
What Canada must do
Canada doesn’t need to start from scratch, but we need several shifts:
- Standardize data. Create a harmonized data dictionary and reporting schema across provinces and regulators. Let regulatory filings plug into dashboards instead of languishing in silos.
- Adopt risk-based supervision. Rather than inspecting all firms uniformly, use sup-tech to surface anomalies and outliers, allowing regulators to prioritize attention where it matters most.
- Enable regtech partnerships. Encourage advisors and fintechs to adopt regtech tools that ease compliance burden while coordinating with supervisory systems so regulators and firms speak the same language.
- Build capacity. Hire data scientists, evolve internal structures and rewire workflows. This is investment, not cost.
- Manage the risks. Sup-tech brings challenges — data quality, model drift, algorithmic bias, vendor dependencies. These must be actively governed. But they’re manageable, and far preferable to the alternative.
The choice ahead
Critics will argue that sup-tech is nascent and experimental. They’re right — it requires careful implementation. But the alternative — dismantling consumer protections in hopes of lowering costs — is reckless. Other jurisdictions are proving you don’t have to choose between access and protection.
Edwards is correct that something must change. But calls for less regulation misdiagnoses the disease. Canada’s financial system doesn’t need weaker guardrails; it needs smarter enforcement. By investing in sup-tech, harmonizing data standards and modernizing supervision, we can reduce costs and duplication while strengthening consumer protection.
That’s not a compromise. It’s progress. And Canada should get on board.