Advocis applauds CSA delay

Advocis applauds CSA delay

Advocis applauds CSA delay

Opposed to any regulation that would ban trailer fees or impose fiduciary duty on financial advisors, Advocis is happy to hear the CSA will discuss both issues further before acting.

“This cautious and reasoned approach is the right course because there’s so much at stake," said Advocis President and CEO Greg Pollock in a release. "A wrong decision could have devastating consequences, so we’re relieved that the regulators are taking the time to consider all the facts.”

The CSA released, Tuesday, two status reports identifying that it would continue consultations on mutual fund commissions and statutory fiduciary duty. There is ongoing industry debate over both issues, determined the CSA. Whether current regulatory framework adequately protects investors and what impact new regulation would have on investors and capital markets need to be considered, says the CSA.

In regards to mutual funds, the CSA says those opposed to banning embedded fees argue that there is no justification for such a change and that negative consequences include less access to advice, the elimination of investor choice and a disproportioned playing field for competitive products. Investors, on the flip side, according to the CSA, say embedded compensation should be banned and that advisors should be held more accountable by regulators in areas such as proficiency requirements and use of titles.

“Given the varying needs of investors, choice should be maintained," said Pollock. "...choice in the kind of compensation and the kind of client-advisor relationship that both parties are comfortable with.”

Advocis, which has more than 11,000 members across Canada, believes eliminating embedded fees would drive up the cost of financial advice so much that hundreds of thousands of middle-class Canadians would be left unserviced.

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2 Comments
  • Harley Lockhart, CFP, CLU, CH.F.C. 2013-12-18 2:02:47 PM
    To avoid any misunderstanding, Advocis, as stated in its Code of Conduct, requires members to place the client's best interest ahead of their own. We therefore reject the notion that a "legislated" fiduciary standard is needed or even appropriate in Canada. A leading Toronto law firm, in studying the issue of client protection from self-serving advisors, concluded that Canadians are better protected under the Common Law practices already in place than are investors in UK and Australia who have recently legislated fiduciary standards. Introducing such legislation in Canada would only serve to restrict the abilities of good advisors to provide custom advice specific to their clients' needs.
    Chair, Advocis Board of Directors
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  • Rob Bauml 2013-12-18 2:27:58 PM
    It seems odd to me that it states above: On the flip side...commissions should be banned and advisors should be held more accountable on proficiency requirements and the use of titles. I am not sure what the use of a title has to do with banning commissions. If I am proficient, educated, hold myself out properly and keep my clients interests first at all times, what difference does it make how the client and I decide to compensate me for my work?

    I believe that the problems that the regulators perceive in our industry are secondary to this problem: Canadians are either unwilling or unable to make quality financial decisions. I see this in client meetings every day. They need advice now more than ever. Financial Advisors are here to help those Canadians and we need to make the industry stronger to help them. Unnecessary regulations will not help Canadians in the long run.
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