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 SOCIEITIES CANADA (THE “CAC”) COMMENT LETTERS

Proposed Amendments and Proposed Changes to Implement an Access Equals Delivery Model for Non-Investment Fund Reporting Issuers

The CAC supports an electronically enabled access equals delivery (AED) model that can benefit investors and issuers by providing more timely disclosure than paper delivery and reducing costs and environmental impact related to printing and mailing documents. We remain concerned as the proposed model relies heavily on the System for Electronic Document Analysis and Retrieval (SEDAR), whose interface poses challenges for investors to locate and access documents. Functionality enhancements to SEDAR (the implementation of its successor, SEDAR+) are necessary before implementing the Proposed Amendments. SEDAR+ should contain enhancements enabling investors to subscribe to electronic alerts for new filings on issuers of interest and allows the use of value-added “open data” solutions by issuers, vendors, and dealers. Issuers should be encouraged to maintain a website as a secondary point of reference for disclosures. We do not think the requirement to issue and file a news release after filing financial statements and related management discussion and analysis (MD&A) is unduly costly or onerous or that it is necessary to consider alternative ways to alert investors.

CSA and CCIR Joint Notice and Request for Comment – Proposed Amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations and to Companion Policy 31-103CP and Proposed CCIR Individual Variable Insurance Contract Ongoing Disclosure Guidance Total Cost Reporting for Investment Funds and Segregated Funds

We support the Canadian Council of Insurance Regulators’ (CCIR) efforts to enhance cost disclosure in the insurance sector. Total cost reporting in the securities sector is long overdue. 

Our comments note several missed opportunities for the Canadian Securities Administrators (CSA) to foster comparability across disclosures and product types. 

We do not support the proposal to present management-related and trading expenses as a single, combined metric. This obscures the differences between these costs, denies investors full disclosure about investing costs, leaves investors without the tools to engage in meaningful value-for-money analysis, and impairs comparability across different investment funds and their managers and strategies.

We expected that the CSA would draw a more explicit connection between available evidence and the design of the cost reporting templates included in the Proposals: 

• The UK and EU adopted total cost reporting four years ago, but the Proposals disclose no efforts by the CSA to learn from the experience of these jurisdictions 
• The Proposals do not explain how the templates incorporate findings from previously published behavioural insights research

We will not give weight to the unpublished Ontario Securities Commission (OSC) research cited in the Proposals as being reflected in the templates, as OSC staff have refused to share this research with stakeholders. If the OSC and CSA have enough confidence in this research to form a basis for proposed rules, they should have enough confidence to share it with stakeholders. 

Given the importance of total cost reporting for investor protection and the resulting need to move swiftly with adoption and implementation, we hope the CSA corrects course sooner rather than later.

FCAA Proposed Changes and Request for Further Comment – Proposed Regulations under The Financial Planners and Financial Advisors Act

The CAC strongly supports a title protection framework to deal with unregulated titles and credentials used by individuals providing or purporting to provide financial services and advice. 

The Financial and Consumer Affairs Authority of Saskatchewan (FCAA) must implement substantial criteria for credentialing bodies and the financial planner/advisor credentials to ensure strong, uniform minimum standards for title users. It is critical that any title protection framework harmonizes with and supports proficiency and conduct regulation, such as securities and insurance regulation. 

Some of the proposals in the Consultation will result in decreased harmonization with the Financial Services Regulatory Authority of Ontario’s (FSRA) professional title protection legislation. Creating a solid investor-centric framework with stringent minimum standards for expected knowledge and competencies should be an overriding priority. Baseline competencies must be created for both the financial planner and advisor titles that best serve the public interest as their primary objective. 

We urge the FCAA and other regulators to consider the intersection of these credentials with the requirements already set out by securities regulators and self-regulatory organizations. This will avoid duplication of the existing proficiency/credentialing requirements and will likely result in an increased regulatory burden that does nothing for the public interest. 

Given the fast-paced nature of change in the financial industry, it is important that financial planners/advisors hold current, active credentials and are subject to continuous and robust conduct oversight.

Mandatory disclosure of a title holder’s credentials and an explanation of those credentials should be the minimum requirement. They could be like the requirements placed on securities registrants in their relationship disclosure documentation.  

The proposed enhanced disclosure requirement is warranted to help alleviate consumer confusion surrounding the standards required to use the title of a financial advisor. Further, credential holders should also have to explain to their clients in plain language any limitation on the scope of their product knowledge or regulatory authorizations. 

OTHER LETTERS FILED:

Department of Finance – Corporate Governance Consultation: Improving Diversity and Facilitating Electronic Communications in Federally Regulated Financial Institutions

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.