Regulatory changes to shake up advisor-client relations in Canada

Regulatory changes to shake up advisor-client relations in Canada

Regulatory changes to shake up advisor-client relations in Canada Regulators in Canada are looking to shake up the advisor-client relationship in a move that could ultimately see advisors held responsible for investment decisions they make for clients and the introduction of a best interest standard.

A new consultation paper from the Canadian Securities Administrators (CSA) entitled “Proposals to Enhance the Obligations of Advisors, Dealers and Representatives Towards Their Clients” has been released outlining a series of “proposed targeted reforms”.

“With the publication of this consultation paper, the CSA expect to open a dialogue with all market participants on improving the relationship between clients and their advisers and dealers,” said Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers in a statement.

The consultation paper includes suggested reforms to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, along with guidance across a host of areas meant to better align the relationship between advisors and clients and enhance certain obligations. It also outlines a regulatory best interest standard that would offer a governing principle against which all other client obligations would be interpreted. It reports that all jurisdictions – meaning all provinces with the exception of British Columbia – have agreed to examine this standard further. It has received strong backing in Ontario and New Brunswick, while the likes of Alberta, Manitoba, Nova Scotia and Quebec have agreed to look at it further.

Now regulators are asking for feedback from the industry on the reforms before the recommendations are formalized. The recommendations cover such areas as know-your-product requirements, know-your-client requirements, conflicts of interest and more.

What are your thoughts on the proposals? Leave a comment below with your thoughts.
2 Comments
  • Ken 2016-04-29 11:25:15 AM
    Majority of retail investors wrongly believe this duty already exists . The word advice implies that it is informed and safe to take but the reality is that it is not always.The word advisor is made up- the actual registration is dealer representative or salesperson . The industry has too much imagery for it's own good. IIAC falsely states that prevailing Iiroc rules is functionally equivalent to best interests but when it comes to disputes we're back to the lowly suitability standard.
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  • Russ 2016-04-29 2:49:21 PM
    "...in a move that could ultimately see advisors held responsible for investment decisions they make for clients..." Wow! What a novel idea! Being held responsible. Excuse the sarcasm, but it seems rather outrageous to say the least that an advisor can disavow responsibility by asserting that an investment decision was nevertheless "suitable." It's about time.
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