Canada's securities regulators to give retail investors a stronger voice

Louis Morisset, CSA chair and president and CEO of the AMF, says investor advisory panel will help address 'natural barriers'

Canada's securities regulators to give retail investors a stronger voice

Retail investors across Canada can now expect to have a stronger say in policy development through a new proposal from the Canadian Securities Administrators (CSA).

The CSA has announced that it plans to establish an Investment Advisory Panel (IAP) that would represent the interests of retail investors across the country. In relation to that, the CSA has launched a public consultation, which will end on February 1, on the proposed IAP as well as terms of reference that will govern its functioning.

“We’re able to easily get the perspective of the industry through several associations, but it’s more difficult to get the investors’ perspective,” Louis Morisset, chair of the CSA and president and CEO of Autorité des marchés financiers, told Wealth Professional. “In Canada, we have several organizations that speak on behalf of retail investors, but we thought we should have a dedicated body to have structured and sustained engagement with the investing public.”

According to a notice detailing the proposal, the CSA IAP will be composed of experts on retail investor concerns from across the country. Its two main functions will be:

  • To represent retail investors to assist the CSA with its mandate, with a view to improving securities regulation and policy development; and
  • To enhance investor involvement in market regulation by promoting dialogue between retail investors and CSA members, which has traditionally happened through comment letters or ad hoc engagement.

“The reality is that it’s much more difficult for retail investors to invest the time or the energy to look deeply into our projects,” Morisset said. “The industry has the means to devote people to do that, but it’s not as true for an investor advocate. … There are natural barriers to getting input from retail investors in our rulemaking process.”

While the panel will have the independence to decide what issues and priorities it will comment on, it will receive support from the CSA. Under the proposal, the IAP will receive administrative support through the CSA Secretariat’s office. A yearly budget, subject to approval by the CSA, will also be provided for the IAP’s activities such as retail investor consultation efforts – which may include roundtables, focus groups, and surveys – research, outreach, or preparation of submissions.

Following the comment period, the CSA will post an announcement on its website and accept applicants for the CSA IAP; applicants are expected to have qualifications, experience, or skills across a wide spectrum of retail investor concerns. The CSA also said it will strive to appoint a panel that’s diverse in terms of geography as well as key demographic criteria, and will not substitute for the work conducted by CSA members’ existing panels and committees.

The OSC will also select at least one OSC IAP member to become part of the CSA IAP to ensure appropriate interconnection between the two panels’ efforts. Members will be appointed for staggered terms of three years. The member selection process, which will be conducted by a committee composed of CSA members’ executives, is expected to be completed in the spring of 2022.

“We’re excited to be moving forward with this project, and we hope to get support from all including the industry,” Morisset said. “We want this IAP to be up and running as soon as possible, probably by mid-year next year. … Our job is to protect investors, and getting the perspective of investors is key for us to do that.”