Canadian advisor regulation on track globally: Report

Canadian advisor regulation on track globally: Report

Canadian advisor regulation on track globally: Report

“The terms ‘fiduciary’ and ‘best interest’ are over-used, casually and interchangeably, to describe a wide range of possible and unclear obligations,” noted Laura Paglia, a Torys Partner and author of the report. “When we looked at the content of the obligations of investment advisors in the U.S., the U.K. and Australia, we found that none of these jurisdictions have, or are considering, more onerous requirements than those already in place in Canada.”

The report recommends that the CSA look to those jurisdictions when coming to its own findings, while taking into consideration “the underlying substance and context informing the concepts that are being considered.”

The CSA has yet to respond to the question at hand or respond to the report's findings.
 


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2 Comments
  • Doug McCaw 2013-11-11 1:52:01 PM
    What is the downside to introducing a "statutory fiduciary duty" on financial advisors? They are dealing with their clients financial welfare. Next to healthcare what could be more important?
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  • Harley Lockhart, CFP, CLU, CH.F.C. 2013-11-13 10:59:02 AM
    Focus on the best interest of the client is foundational for an effective industry. The current situation, based on common law precedent, determines whether an advisor's advice is appropriate based on the facts of the case. My understanding is that a legislated fiduciary duty will remove the facts of the case (education, expertise of client among others) and impose a uniform standard of care in every situation. I find it inappriate, for example, to apply the same standards to the advice provided to an 80 year old widow who has never even written a cheque and her 50 year old son/daughter with an MBA and years of investment experience. In fact, the more detailed the statutory standard, the greater the potential an unethical advisor may find cracks in the rules to avoid the standard.
    The most reasonable approach to me is to set the level of care at placing the client's ahead of the advisor's. If the natural expectation of an action would benefit the advisor more than the client, it would be offside.
    Fortunately for me, and anyone else I may encounter, I am not a lawyer. These are just the observations of a concerned practitioner.
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