The pace of regulatory change was one of the main concerns of the Advocis Symposium, held Nov. 22 in Toronto.
Approximately 200 financial advisors attended the event called The Regulation of Financial Advice in Canada: The Game has Shifted, which featured keynote speaker, Ontario’s Minister of Finance, Dwight Duncan, as well as regulators, company presidents and legal experts.
In his opening comments, Greg Pollock, President and CEO of Advocis, The Financial Advisors Association of Canada, told the audience that he can’t think of a time in financial services where so much has happened so quickly. He noted that most jurisdictions are continuing to review how best to regulate the financial sector in the wake of the world financial crisis. This review is not just a domestic review but a global one, he noted.
He warned that regulatory change should not be made too quickly. “Change that is not well thought out and considered by all stakeholders can have unintended consequences that can be damaging to the industry and consumers.”
“Unnecessary and unpredictable change often has the effect of needlessly disturbing existing market practices that have been established over a long period of time and are working well for all stakeholders, consumers included.”
He said that his association supports evolutionary change in the industry where all industry stakeholders are invited to contribute to the discussion as opposed to rapid, revolutionary change. “In choosing an evolutionary path to change, we are more likely to have the time to address problems and develop well reasoned responses.”
He says he supports regulatory review that identifies problems and “provides solutions that would least disrupt market forces” in achieving objectives.
Mr. Pollock said that the problems experienced in other countries are not necessarily present in Canada. One example he mentioned is that of regulators in the United Kingdom and Australia banning third party commissions for the sale of investment products. “Does this mean that we should do the same in Canada? To conclude yes, just on what we hear in the media or read in the paper, would simply be reactionary. It would represent change for change’s sake only.”
Before answering the question of whether such a measure should be taken in Canada, it would need to be determined what caused the need for change in these countries, whether these same problems are present in Canada, and whether there are other alternatives available to address the problem if it exists here.
“To answer such questions requires that the industry and regulators work together…to act without first identifying the problem would simply be to follow a global trend for the sake of following a global trend.”
“It would be a mistake to close our eyes to what other jurisdictions are doing, but here in Canada we have a system where a financial advisor can operate on a fee-only basis with his client or the advisor can operate on a commission based system…In Canada I see no need for the reforms we are witnessing in the United Kingdom and Australia.”
The Insurance and Investment Journal will have an extensive report on the Advocis Symposium in the January 2011 edition.