The Portfolio Management Association of Canada (PMAC) says that the Canadian Securities Administrators’ (CSA) proposals for a best interest standard do not offer investors any more protection, and would end up creating confusion.
PMAC represents more than 230 firms which, when combined, have about $1.5 trillion of assets under management. While the association supports the CSA's recommendation to introduce a harmonized, statutory fiduciary duty for all investment accounts that are managed on a discretionary basis, it argues in its recent submission to the CSA that a best interest standard would be superfluous.
"The proposed regulatory best interest standard is not as high a standard as the fiduciary duty and is therefore unnecessary," reads the document. "Additionally, the regulatory best interest standard would risk unneeded confusion and lowering the standard of care owed by portfolio managers due to the overlap of differing duties – all to the detriment of investors."
To cause investor confusion
As we reported earlier, the British Columbia Securities Commission has described the best interest standard as unworkable. If not all provinces adopt the measures, PMAC suggests that the proposed rule would cause investor confusion by creating fragmented, uneven obligations across the country.
Instead of taking a one-size-fits-all approach, PMAC argues that the CSA should tailor the regulations to account for standards that are already in place. “The fiduciary duty is the gold-standard of care for investors,” says PMAC president Katie Walmsley. “It is principles-based with a long and developed history of jurisprudence surrounding its meaning and application.”