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July 2019
FAIR Focus

FAIR Canada Opposes IIROC Proposal to Water Down Weak Enforcement Regime 
FAIR Canada opposes the proposals of the Investment Industry Regulatory Organization of Canada (IIROC) for alternative forms of discipline to address rule contraventions committed by individuals who work in specific roles requiring registration under securities laws (Approved Persons), referred to as the Minor Contraventions Program (MCP) and Early Resolution Offers (ERO).  FAIR Canada is disappointed that its earlier comments and recommendations provided to IIROC and the Ontario Securities Commission (OSC) in May 2018 have not been adopted nor its concerns with the proposals addressed. 
There is no requirement for eligibility to use the MCP or ERO proposals that there be compensation for client losses, including commissions, interest and fees, and disgorgement of any profits the Approved Person and the Dealer Member earned as a result of the rule contravention. The MCP proposal will result in no publicly accessible registration database record of rule contraventions committed by an Approved Person and sanctions imposed by IIROC under MCP.  Rather a no-names quarterly and annual report issued by IIROC staff will be the only public record.  There will be very limited and restricted ability for the public, including any client harmed by the rule contravention, to determine whether IIROC staff appropriately applied the criteria for using MCP in any particular case. 
IIROC is a public interest regulator carrying out delegated regulatory authority pursuant to orders issued by the OSC and other provincial securities regulators. In order to achieve transparency and ensure public confidence, FAIR Canada recommends that IIROC apply open court principles of law to hearings to consider any proposed settlement of enforcement matters whether pursuant to MCP, ERO or otherwise.   

To read our full submission click here.

To read our consumer Q & A Article click here
Consumers Council Report calls for Greater Public Inclusiveness in Government Consumer Complaint Handling
A primary source of information for market conduct reviews and enforcement investigations is regulators' consumer complaint data. Regulators rely on consumer complaint data to identify business practices, unusual trends and sector -- or industry-wide -- patterns that warrant investigation. Yet regulators tend to pay little regard to consumers and the detriment they experience once the complaint is filed.

Trends are appearing in the U.S. and Europe where governments provide greater transparency of their consumer complaint databases, to give consumers and consumer advocacy groups a greater role in the complaints management processes. For example, in 2002, a "super-complaints" system was established in the UK government by the then Office of Fair Trade (now the Competition & Markets Authority). This system allows a designated consumer body to submit a complaint that "...any feature, or combination of features, of a market in the UK for goods or services is or appears to be significantly harming the interests of consumers". This research provides consumer and government views on the current government complaint handling systems, gauges receptivity to alternative systems being implemented in other countries where greater transparency, consumer and consumer advocacy group participation is encouraged, and discusses the challenges and barriers to adopting similar alternative systems in Canada. (source:https://www.consumerscouncil.com/research-reports)

The Consumers Council of Canada is a non-profit, voluntary organization working towards an improved marketplace for consumers in Canada. 
Quebec's AMF Issues Practical Guide for Protecting Vulnerable Clients
The AMF has issued a guide for firms and financial advisers on steps they can take to help their clients protect their financial well-being, prevent and detect financial mistreatment, and assist clients who are experiencing mistreatment.

As stated in the AMF guide, several factors can make clients vulnerable, including an injury, illness, mental health issue, cognitive impairment or disability. Vulnerability may also be caused by financial illiteracy, social isolation and difficulty managing, or an inability to manage, one's affairs or cope with specific life events (bereavement, financial problems, a sick family member, etc.). The vulnerability may be temporary or permanent.

The firms and representatives play a key role in helping people who are in a vulnerable situation protect their financial well-being. They are instrumental in preventing and detecting financial mistreatment among consumers of financial services. Firms and representatives can also help clients experiencing financial mistreatment get the assistance they need. The AMF's guide proposes possible courses of action firms and their representatives can take to protect vulnerable clients.

In 2017 FAIR Canada issued the Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence and Diminished Mental Capacity which made 6 recommendations on how to better protect seniors and vulnerable investors. 
Chair of OSC Panel Calls for Better Regulation of Misleading Titles 
The Financial Professionals Title Protection Act, 2019 is a long overdue effort by Ontario to at long last regulate the use of certain titles used by businesses offering services referred to as "financial planning" or "financial advice".   As pointed out in a recent article published in the Globe and Mail authored by Neil Gross, currently the Chair of the OSC Investor Advisory Panel and a former Executive Director of FAIR Canada, until now it was possible for people who offer financial advice and financial planning to the public to do so without any licensing or registration requirements, no minimum proficiency standards, no rules of conduct and no compliance audits.

The requirements of this new legislation is to be subject to regulation and enforced by the new Financial Services Regulatory Authority of Ontario (FISRA). 

This is an important step in the right direction but only a baby step. As Mr. Gross points out in this article and as has been pointed out by FAIR Canada in the past, the use of multiple, confusing and misleading titles by people who work in the securities industry and provide investment advice to clients of firms, even the titles used by the regulators themselves, remains a problem begging a regulatory response.
FAIR Canada in the Media 

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