Association sets out recommendations, including reminder to stick to nationally harmonized regulation
The Portfolio Management Association of Canada has warned the OSC not to “blur the lines” when it comes to fiduciary duty.
While broadly supportive of the commission’s recently released statement of priorities, it reminded the organization that any amendments made to the registrant-investor relationship are nationally harmonized, principles-based and, crucially, “do not impose duplicative, overlapping or inconsistent duties on registrants”.
The OSC plans to create a best interest standard in the coming year, along with reforms outlined in the NI 31-103, and the PMAC said it wanted to know whether this remains the preference of the OSC and the Financial and Consumer Services Commission of New Brunswick.
Katie Walmsley, president of the PMAC, told the OSC not to lose sight of its plan to have a nationally harmonized statutory fiduciary duty rather than introducing jurisdictionally fragmented amendments that “would be detrimental to investors, our markets and to the global competitiveness of Canadian firms”.
She said: “Wherever they land in their next publication, whether they land with this bifurcated result with the OSC in New Brunswick, having an overarching regulatory best interest and then separate target reforms, we’ve said from the beginning, don’t forget about fiduciary duty and blur the lines, and throw portfolio managers into this newly defined best interest standard when they already have a fiduciary duty. It’s a duplicate.
“The hope is that they are going to embed a regulatory best interest standard into the target of reforms and still have the fiduciary duty for portfolio managers.
“But our hope is that there is significant carve out and a minimal new target of reforms for portfolio managers because of the fact they already have this fiduciary duty.”
The PMAC also highlighted the need for the OSC to keep its foot on the gas when it comes to reducing regulatory burden.
Walmsley said many advisors are doing a multitude of client management jobs but not doing stock picking and research, particularly in larger firms where there is a segregation of duty.
She said: “The issue right now is that these advising reps are also required to have the relevant investment management experience, including stock picking and research, and they are not actually doing that as part of their job. So it is a complete regulatory burden that is adding no value to the investor and not improving investor protection because they are expecting to have experience before they can be registered but that’s not actually part of their jobs.”
She added it’s about recognizing how the industry has evolved but said that the OSC and CFA acknowledge this is a problem and are looking for a solution.