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

Autorité des marchés financiers (AMF) – Draft Regulation Respecting the Prohibition on Charging Certain Fees from Holders of Individual Variable Insurance Contracts Relating to Segregated Funds

The CAC strongly supports banning deferred sales charges (DSCs) and other upfront commissions in segregated fund contracts. We also strongly recommend that the AMF evaluate a potential ban on the “advisor chargeback” option for segregated funds.

Our key comments are summarized below:

• We agree that DSCs are inconsistent with the objective of supporting the fair treatment of clients
• DSCs and other upfront compensations create conflicts between consumers and advisors, incentivizing advisors to sell products that provide them with the highest compensation rather than those that are the most suitable for their clients
• The advisor chargeback option carries many of the same conflicts as other upfront compensation structures for advisors and compounds some of these conflicts

Ombudsman for Banking Services and Investments (OBSI) – Governance Review – Request for Public Comment

The CAC supports enhancements to OBSI’s governance structure to ensure diverse industry and financial consumer voices are heard in the pursuit of its organizational mandates. OBSI should adopt a skills-based nominations structure whereby directors are nominated through a process requiring well-defined skills and attributes instead of the nomination by or inclusion of representatives from any particular industry or consumer group. This would mitigate the risk that directors’ independence and loyalty to OBSI are perceived as compromised by a conflicting duty to a specific constituency or industry segment.

The pursuit of these reforms is no reason to delay or defer action on the long-stated legislative and regulatory intention to grant OBSI binding authority and sole recognition over securities and banking-related disputes.

Financial Services Regulatory Authority of Ontario (FSRA) – Consultation on Proposed Amendments to the UDAP Rule – Deferred Sales Charges

The CAC supports the proposed ban on DSCs and the general elimination of conflicts of interest and regulatory arbitrage. However, the CAC believes that additional disclosure is necessary for customers to fully understand the costs of available or chosen sales options. The CAC also urges FSRA to review the “Advisor Chargeback” option for a ban, as it raises inherent conflict of interest issues. We support the amendments and encourage their implementation at the earliest opportunity.  

Other letters filed:

• AMF – Draft Regulation Respecting Complaint Processing and Dispute Resolution in the Financial Sector
• IIROC – Review of the IIROC Arbitration Program
• CSA/IIROC – Joint CSA and IIROC Staff Notice 23-329 – Short Selling in Canada
• CSA – Consultation Paper 21-403 – Access to Real-Time Market Data

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.