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May 2016
FAIR Focus
FAIR Canada's Monthly Review
Is "Best Interests" finally breaking through?

We are pleased to see that investor protection has been at the top of the agenda on several policy fronts this past month. 
The Ontario Ministry of Finance's Expert Committee to Consider Financial Advisory and Financial Planning Alternatives released its Preliminary Policy Recommendationsacknowledging many of the challenges investors face in light of the way financial advice is currently regulated in Ontario and the absence of financial planning regulation in Ontario. The report makes 8 recommendations, laying the groundwork for reforms focused on investor protection. 

The Canadian Securities Administrators also recently published a consultation paper proposing targeted reforms and a regulatory best interest standard that would work to improve the client-advisor relationship so as to afford investors greater protection. More is included in our newsletter about this initiative.
We are encouraged by the fact that both regulatory and government bodies understand that the status quo does not afford adequate investor protection and are taking positive steps to change the current system. We are hopeful that real change, resulting in the provision of meaningful investor protection, will come from these initiatives.

Best wishes for the month ahead. 

The Team at FAIR Canada 
On April 28th the Canadian Securities Administrators (CSA) published a consultation paper on proposed regulatory amendments aimed at improving the client-advisor relationship, including developing a  regulatory best interest standard. FAIR Canada is pleased that the CSA has recognized the serious investor protection concerns existing today for consumers of financial services in Canada. FAIR Canada strongly agrees with the CSA that the status quo is not acceptable as it does not protect Canadians who are saving for their retirement and other financial goals. Fundamental reforms are needed to yield a fair and effective marketplace where investors obtain better financial outcomes and receive professional advice in their best interests.
Instituting a best interest standard will require profound changes, including changes to some existing business models. In order to provide professional advice that is in the consumer's best interest, the advisor needs to be sufficiently proficient, and able to operate with independence, free from conflicts of interest that harm market efficiency and harm investors. A best interest standard must therefore include, as one of its key guiding principles, a framework to eliminate the conflicted remuneration structures that harm investors. 
The CSA is accepting comments on this consultation until August 26, 2016. FAIR Canada looks forward to providing the CSA with substantive comments and we encourage others to comment on this important issue.
The US Department of Labor (DOL) recently finalized rules to address conflicts of interest in retirement advice. Elements of the final DOL rule, including the "Best Interest Contract Exemption," (or BICE) were modified after last year's public comment period. The final DOL rule makes major changes to the basic rules governing retirement investment advice.  In a recent interview Knut Rostad, the co-founder and president of the Institute for the Fiduciary Standard, a U.S. non-profit organization formed to advance the fiduciary standard, discussed what he likes and does not like about the final DOL rule. For more detail about the rule, go to the DOL's overview site, which includes a fact sheet and the full text of the rule.
The OSC's Investor Office recently sat down with Neil to discuss his background and FAIR Canada's work. The article is part of the Investor Office series of discussions with key figures in Canada's financial services industry whose work impacts investors.
The case for robo-reciprocity
Reciprocal enforcement of disciplinary orders is a practical way to reduce problems caused by regulatory fragmentation, but it needs to be comprehensive and automatic. Read full article here.
MediaFAIR in the Media
Public & Private Securities Enforcement: Improving Recovery for Harmed Investors Conference
FAIR and Osgoode Hall's conference is available online. Watch conference videos or read panel summaries on FAIR's website.

NASAA Conference
On May 16 the North American Securities Administrators Association will host a public policy conference discussing
Enforcement & Deterrence in Today's Financial Markets. 

Expert Panel on Financial Planning Holds Public Consultations
In May and June, the Ontario Ministry of Finance's Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives will be hosting public consultations across Ontario. Individuals and groups can also provide their comments on the preliminary report.
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