CSA: Investor Advisory Panel’s annual report highlights work on conflicted compensation


csa report

The Investor Advisory Panel today released its 2016 Annual Report summarizing its recommendations, activities, submissions, consultations, and meetings during the calendar year.

In 2016, the Panel focused on five critical areas of investor protection:

  • conflicts of interest and conflicted compensation,
  • the need for a best interest standard,
  • risk profiling,
  • the Ombudsman for Banking Services and Investments (OBSI), and
  • the new Capital Markets Regulatory Authority, specifically the future of the Investor Advisory Panel within the new national securities regulatory framework.

During the year, the Panel put the focus directly on the state of investor protection in Ontario, producing 12 submissions and comment letters that bring the investor perspective to rule and policymaking.

For example, in its submission to CSA Consultation Paper 33-404, the Panel called for a best interest standard to “facilitate the shift of investment advice from a sales focused industry to a profession, where investors are well-served by individuals with the expertise and training to meet their needs and consider their interests first and foremost.”

The Panel also built on independent research it commissioned from PlanPlus Inc. to host a successful Risk Profiling Roundtable that fostered further dialogue among investors, industry, and regulators on this important topic.

In addition, the Panel called on regulators to eliminate conflicted compensation practices like embedded commissions. Conflicted compensation and any inducements that subordinate investors’ interests to those of registrants and firms are unacceptable – they undermine the trust that is an integral part of the advisor-client relationship.

Conflicted compensation practices and embedded commissions will remain a high priority for the Panel in the year ahead.

The year 2017 has the potential to be a transformative year for investor protection,” said Ursula Menke, Chair of the Investor Advisory Panel. “But only if the OSC and other regulators act to introduce a best interest standard and eliminate egregious and systemic conflicted compensation practices at regulated firms. We also remain concerned that the future of the common regulator is not clear on investor engagement, including formal mechanisms for meaningful investor input, such as an Investor Advisory Panel.

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CSA: Investor Advisory Panel’s annual report highlights work on conflicted compensation

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