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October 2018
FAIR Focus
Financial Literacy Month

November is Financial Literacy Month. We urge investors to check out our resources such as our video series on Understanding Your Statements to help you break down the information found in your annual performance statement and your cost reporting statement - two documents you should be receiving annually from your investment dealer. If you are thinking of investing with someone, make sure you take your time and access Check Registration and review our tips to avoid investment fraud. There are several resources you can go to here  which provide additional information to help investors protect themselves from fraud. We also encourage you to take a look at the experience of the free Investor Protection Clinic in its first year of operations. The Investor Protection Clinic's Annual Report includes some lessons and recommendations, based on the clients the clinic has assisted/
 
We urge you to check out our newsletter below and consider adding your voice to the letter-writing campaign of FAIR Canada, the Consumers Council of Canada and CARP to parliamentarians to call on them to act and better protect banking consumers. You can visit carp.ca/oneombuds to make your voice heard.
 
The Team at FAIR Canada 
Summary of FAIR Canada Comments on the Client Focused Reforms

In its comment letter, FAIR Canada commends the CSA for pursuing reforms to the client-registrant relationship with the goal to better align the interests of registrants and clients so that advice is not compromised by compensation related and other conflicts that result in the firm and their representatives placing their own interests above those of their clients, to improve outcomes for clients and to make clearer the nature and terms of their relationship with registrants. 

While we commend the CSA at arriving at a harmonized proposal, and we regard some of the reforms positively (and have suggestions for improvement), FAIR Canada strongly believes that a statutory best interest standard is necessary, desirable and feasible, with respect to securities advisers, dealers and individual registrants ("Registrants") in their conduct towards retail investors. The Proposed Amendments at best may nudge Registrants in their conduct but will not achieve the profound shift necessary to ensure Canadians receive the objective, professional financial advice that is needed and rightfully expected.

Our comments include:

Conflicts of Interest - Addressing conflicts in the best interest of the client is not the same as having a duty of loyalty (i.e. acting in the best interest) towards the investor in the advice and services provided. A best interest standard would prevent compensation structures that undermine investors' interests.

To read more click here.

To review our full submission, click here
Consumer Advocates Launch Campaign Calling for One Banking Ombudsman

FAIR Canada, CARP, and the Consumers Council of Canada are calling on the Government of Canada to protect banking consumers by appointing a single, not-for-profit organization to act as the ombudsman for the retail banking sector across the country. CARP, the Consumers Council of Canada and FAIR Canada have launched a letter writing campaign to parliamentarians to call on them to act and protect consumers. Consumers can visit  carp.ca/oneombuds and make their voices heard.

Under the current system in Canada, banks are free to pick their own referee to make sure consumers' problems are resolved in their favour. Banks are given the freedom to select their external complaints body to resolve consumer complaints that are not resolved at the level of the bank. This forces external dispute resolution firms to compete for banks' business and puts pressure on them to rule in the banks' favour, so they will continue to get their business.
Consumers have no say in which provider is used to solve their problems. It makes no sense for consumers to be forced into a situation where they must take their issue to a private, for-profit resolution provider selected by their bank.

To read more, click here
Report on Cryptocurrency Exchanges Finds Serious Problems

Anna Irrera of The Globe and Mail reports that several cryptocurrency Exchanges are plagued by poor market surveillance, pervasive conflicts of interest and lack sufficient customer protection, according to a report issued by the New York Attorney General's office. FAIR Canada believes that such exchanges operating in Canada should also be examined, if they have not already, and consumers appropriately warned depending on the findings. To read the New York Attorney General's Report, click here.

Government of Ontario Does Not Agree with CSA's Proposal Regarding Embedded Commissions in Mutual Funds

The Ontario Minister of Finance has released a  statement regarding proposed CSA amendments to Mutual Fund Sales Practices rules at the same time as the CSA unveiled its proposals. The Ministry of Finance indicates that the government does not agree with the  proposal as currently drafted.

The government has indicated its willingness to work with stakeholders to explore alternatives. FAIR Canada, as a stakeholder representing retail investors, would like to express it willingness to meet with the government and provide input on how the government can address embedded commissions so as to make Ontario's financial services sector more competitive and effective, enable Ontarians to better save for their retirement or other financial goals and strengthen retail investor confidence in our capital markets.

FAIR Canada has provided its comments in response to CSA Consultations on mutual fund fees in  2013 and  2017 and has participated on publicly held consultations in 2013 and in 2017. For more information about FAIR Canada, visit  https://faircanada.ca/about-us/.

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