On July 7, the Ontario Securities Commission’s independent Investor Advisory Panel (IAP) released its 2021 report outlining its activities for that calendar year. The IAP’s mission is to provide input to the Ontario Securities Commission (OSC) throughout its policy development process, including identifying issues for consideration, providing input to the OSC on policies to pursue, and responding to requests for comment, all with the voice of investors at the forefront. The OSC Investor Office acts as a liaison between the IAP and the OSC and is the IAP’s secretariate – the IAP however conducts activities without direction from the OSC. It is noted that during the year, the IAP held 24 meetings with external organizations, had 11 meetings amongst themselves and made 6 submissions to the OSC/Canadian Securities Administrators and other regulatory bodies.
Much of the IAP’s focus was placed on disruption and the future of regulation, and, in particular, the entry of big-tech firms into retail wealth management, digital self-sovereignty including the ownership of personal information, biased AI and demographic changes expected to result in a shortage of retail advisors. The IAP expressed concerns to regulators that the fragmentation and responsive nature of securities regulation (as well as product-specific mandates) do not leave regulators well positioned to address the decentralized, fast-spreading evolving marketplace.
The IAP continued to review recommendations made by the Ontario Capital Markets Modernization Task Force and the new mandate for the OSC to include growing capital markets in Ontario. See our summary of some of these recommendations here. The IAP indicated such a mandate would introduce conflict and confusion especially with respect to another of the OSC’s mandates to foster fair capital markets. The IAP submitted to the OSC that it should develop clear guidelines as to how fairness will be maintained under the revised mandate and confirm whether investor protection was still a central focus.
Further concerns were expressed with respect to the Financial Services Regulatory Authority of Ontario’s (FSRA) final frameworks for title protection, on the basis that too many titles could still be used that are confusing with the protected titles of “financial planner” and “financial advisor”. In addition, a preference for FSRA to conduct proactive monitoring of improper title use, rather than relying on public complaints, was expressed. On the issue of dispute resolution, the IAP reiterated its support for binding authority to be granted to the Ombudsman for Banking Services and Investments (OBSI).
The IAP intends to focus its efforts in 2022 on items such as the new self-regulatory organization to be formed upon the consolidation of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA), and the role that model disruption is having in the investment space, including cryptocurrencies and ESG products.
August 17, 2022