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.
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