What’s new with the CAC?

Advancing investor protection, industry professionalism, and market integrity across Canada, the CAC works to focus attention on pressing advocacy files dominating the regulatory agenda. Ensuring fair, equitable, and sustainable outcomes for stakeholders is more important than ever, and through our growing relationships with policymakers and regulators, we are working on several important initiatives. Below is a summary of three areas where we have recently provided comment letters to consultation processes. To see the comprehensive catalogue of our commentary letters, visit us online .

Published Canadian Advocacy Council of CFA Societies Canada (the “CAC”) comment letters

Department of Finance – Government of Canada – Consultation on Fighting Predatory Lending

The CAC strongly supports initiatives to re-examine potentially predatory lending activity impacting consumers and believes additional guardrails are required to alleviate some predatory pricing concerns.

Our key comments are summarized below:

• It is more appropriate to set the criminal rate of interest based on a floating benchmark rate plus a maximum allowable spread rather than solely through a fixed interest rate ceiling
• The creditworthiness of the borrower is not a primary consideration for many of the loans provided through alternative lending channels
• Financial consumers access high-cost installment loans for many reasons, such as being unqualified for a loan at traditional lenders and/or being attracted by the convenient, time-efficient, and accessible channels of high-cost lenders
• To protect consumers from egregious loan terms, it would be helpful to require a consistent interest calculation methodology that does not penalize prepayments or effectively charge interest on interest, as well as a workable cooling-off period
• There are no specific concerns that lowering the criminal rate of interest will have any negative impact on the availability of credit for financial consumers
• To minimize any negative impact on other types of credit products, the new regulation should be conscious of prevailing rates and spreads when setting a new criminal rate
• It is essential to educate consumers on alternatives to high-cost installment loans, which may involve telecom-based lending/banking solutions in remote or Indigenous communities

CCIR and CISRO Discussion Paper on Upfront Compensation in Segregated Funds

The CAC strongly supports initiatives to increase cost and fee transparency in the sale of insurance products. We support the ban on deferred sales charges (DSC) in segregated fund sales and believe both upfront commission structures (DSC and advisor chargeback) should be banned because of the irresolvable conflicts they place between intermediaries and their clients.

Our key comments are summarized below:

• Upfront commissions in segregated funds raise conflict-of-interest concerns because a consumer relies on the intermediary’s advice to purchase a suitable product, and the insurer is paying the intermediary for the sale
• The advisor chargeback option deeply compounds the conflict-of-interest issue described above and should also be banned
• Fee disclosures do not provide consumers with the information needed to properly assess the impact of all costs and fees on their returns, especially with the lack of ongoing disclosure on intermediary compensation
• Dually licensed salespeople, who often make insurance product sales, might be incentivized to sell the less-regulated product
• The principles of managing or avoiding conflicts of interest should be directly reflected in the insurance legislation or regulation
• The obligation of adherence to conflict-of-interest rules could be directly imposed on licensed individuals through the enhancement of regulatory structures and mechanisms, and additional guidance could be provided concerning regulatory expectations as it relates to the comparability of available products

Other letters filed:

• OSC Notice 11-797- Request for Comments Regarding Statement of Priorities for Financial Year to End March 31, 2024
• CSA – Proposed Amendments and Proposed Changes to Implement an Access-Based Model for Investment Fund Reporting Issuers
• IIROC – Consultation Paper (Phase III) – Competency Profiles for Supervisors, Traders, Associate Portfolio Managers and Portfolio Managers

Have your say

If you would like to participate in advocacy activity related to these letters or future policy and regulatory initiatives, provide comments on ongoing initiatives, or learn more about volunteer opportunities in advocacy or as a part of the CAC, please contact cac@cfacanada.org.

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Who is the Canadian Advocacy Council?

The Canadian Advocacy Council (CAC) is a volunteer advocacy council of CFA Societies Canada, representing the twelve Canadian CFA Institute Member Societies and, ultimately, Canadian CFA charterholders. The council includes investment professionals from across the country who review regulatory, legislative, and standard-setting developments affecting investors, investment professionals, and Canadian capital markets. The CAC strives to advance market integrity, transparency, and investor protection, and actively engages Canada’s securities regulators, self-regulatory organizations, industry associations, legislators, and other stakeholders through thoughtful leadership, direct engagement, and the publication of comment letters.