Advisors get stay of execution on ‘best interest’ guidelines

Phew! Advisors may have won a reprieve. The OSC says it won't be mandating definitive “best interest” guidelines this fiscal year.

Advisors dreading the imposition of definitive “best interest” guidelines will likely have a repreive. In its annual update of priorities for the fiscal year, the Ontario Securities Commission says “it does not expect these issues to be fully resolved in 2013-2014.”

Best practice standards on matters such as fiduciary duty and disclosure obligations are one of the hottest topics on the OSC’s agenda. Many are concerned about the possible ban on embedded commissions that could find its way into the new regime. Still, there are other fears that the new regulations could add to an advisor's workload.

But some advisors say they welcome uniform standards across the sector.

“It’s a great idea and there should be some best practices that we all follow,” said Brenda McKinnon, Investment advisor with Dundee Wealth Management in Edmonton. “The problem is that every association people belong to has their own best practices; it would be better if there was one standard that treated everybody the same than having 15 different associations with different standards.”

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While a uniform standards may force some advisors out of the industry, McKinnon thinks that would be “a good thing.” “There are a lot of people, as we know from all the scams that go on, that shouldn’t be in this industry,”

Interested parties -- including investor advocacy groups, industry associations and financial firms – have been seeking clarity on when possible rules may come into force. However, the OSC said that its goals for fiscal 2013-14 were clearly stated and did not imply that new regulations would be established in the period.

“A number of commenters requested the OSC to provide more precise details on the planned timing for specific priorities,” it said. “The priorities do not have timelines because it is implicit that deliverables (e.g. publish a paper, hold roundtables) identified in our plan for 2013-2014 are to be achieved in that timeframe.”