The Canadian Securities Administrators (CSA) have released their action plan for the next three years: enhanced disclosure requirements for ETFs, a potential ban on commissions, and a best interest standard for advisors are at the top of the list.
On July 7, the CSA released a list of objectives they have collectively committed to pursue over the next three years, and the very first category is enhanced investor protection. The regulators want to make sure that investors "can rely on rules and regulations that provide them with clear and relevant information to make informed decisions, that only properly authorized persons provide investment services to the public, that their obligations toward their clients are well understood and aligned with their clients’ interests, and that market intermediaries are properly supervised".
The CSA will complete its rulemaking
With this in mind, the CSA intends to complete its rulemaking and implement requirements for a point of sale disclosure and delivery regime for exchange-traded funds (ETFs). Regulators will also rely on audit committees to assess whether there is a need for additional disclosure requirements in this area.
What's more, the CSA says it will consider whether regulations need to be changed to deal with conflicts arising from embedded commissions. In particular, the regulators will carry out stakeholder consultations to determine whether embedded commissions in investment funds "should be addressed to better align the interests of investment fund managers and dealers/representatives with those of the investors they serve, and implement a regulatory proposal as appropriate."
Public consultations planned
The regulators are also planning public consultations on whether it is necessary to formalize advisors' duty to always act in the best interest of their clients. While the British Columbia Securities Commission (BCSC) has rejected the idea of a best interest standard, over the next three years other jurisdictions will decide on whether to proceed and implement these regulatory reforms.
The full version of the regulators’ action plan may be downloaded from the CSA web site.