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May 2019
FAIR Focus

FAIR Canada Calls for Support from Canadians 
Dear Canadians, 

As you can see from the Globe and Mail story below, FAIR Canada is struggling for funding to be able to properly discharge its mission of representing the interests of Canadian investors and consumers of financial products and services. 

The social contract between Canadians and Canadian financial institutions is working well for the banks, insurance companies and the investment dealers. The government protects them from competition and backstops them in times of crisis. In return, Canadians put their trust in financial institutions and these financial institutions are supposed to treat investors/consumers fairly, honestly and in good faith. They breach this trust by hard selling financial products that are in their best interests, not yours. These products will take 40-50% (or more) of your investment returns over the next 25 years. Canadians retiring with inadequate savings will precipitate a retirement crisis for many Canadians and for governments. 

The financial industry is extremely powerful and influential. In addition to the resources of individual firms, they fund lobby organizations to the tune of $10M or $100M per year. Ordinary Canadians' influence on the government is dwarfed by that of the financial industry. 

FAIR Canada is the only professional national investor rights organization advocating for ordinary Canadians and needs your support. How can you help? 
  1. Help us reach more people! Send this newsletter to 3 contacts and ask them to subscribe (and ask them to send it to 3 more contacts, etc.) 
     
  2. Make a donation to FAIR Canada to help us advocate for better financial outcomes for ordinary Canadians. You can donate here

For lawyers, registered persons and listed companies:

  1. In class actions, consider FAIR Canada as a potential recipient for awards or cy-pres distributions,
     
  2. In regulatory proceedings settlements involving a voluntary payment, consider suggesting to the regulator that the payment be made to FAIR Canada.
Such contributions will serve the interests of retail investors and Canadian consumers of financial products and services. And it may soften the reputational damage of a civil action or disciplinary action.

Thank you for your support! 

Ermanno Pascutto 
Executive Director  
FAIR Canada in the Media: "Advocacy group for Canadian investors struggles for funding and survival" 
Written by David Milstead and originally published in the Globe and Mail. 

...............................................................................................................................

The primary advocacy group for Canadian investors is losing money, looking for an executive director - and struggling to survive.

"We're in a bit of an existential crisis," said Ermanno Pascutto, the founder and, now, interim executive director of the Canadian Foundation for the Advancement of Investor Rights, known as FAIR Canada. The group was started in 2008 to provide a voice for individual investors that would complement, and sometimes oppose, the investment industry's views when securities regulators developed new rules and regulations.

In recent months, FAIR Canada has submitted comments or participated in roundtables on mutual-fund sales practices, the client-financial-adviser relationship, and a proposed code of conduct for banks selling products to senior citizens.

FAIR Canada has survived in large part in recent years on a $2-million gift from Stephen Jarislowsky, the founder of investment firm Jarislowsky Fraser Ltd., and an additional $2-million contribution from the Ontario Securities Commission, which used money collected in settlements and from fines.

To read the full article on our website  click here.
To read the original article on the Globe and Mail website click here. 

T-REX Scores: Mutual Fund Investors Need to Know the Score!
Mutual Funds with 2% MER take 40-50% of your investment return over 25 years! 

How much of your mutual fund returns are lost because of investment fees? 

Most investment fees are quoted as a percentage of the amount invested. So, a fund with 2% fees will cost you 2% of your total investment annually. This method can be misleading. 

When you pay investment fees, you lose twice. You lose the fee and you lose some of your compounding magic. Annual fee quotations give no indication that your 'compounding loss' accelerates as the years pass.

How do you measure the impact of fees on your investments? 

It's simple: calculate your T-Rex score! 

T-Rex Score stands for Total Efficiency Return Index Score. It allows you to calculate how much of your total investment returns on your underlying investments translate into returns for you. The higher your T-Rex Score, the more of your investment return you get to keep. To figure out the T-Rex Score of your investments  you should know: your investment amount, projected average annual return on underlying investments before fees, annual fees, and projected life of investment (time horizon). 

Read the full excerpt on T-Rex Scores here. 

Y ou can input that information on Larry Bates' website to find out your T-Rex Score: www.larrybates.ca . 

Vanisha Sukdeo has joined FAIR Canada as Director of Policy Research
Executive Director Ermanno Pascutto is pleased to announce that Vanisha Sukdeo has joined FAIR Canada as the Director of Policy Research.

Vanisha was Called to the Bar in 2007 and is a Ph.D. Candidate at Osgoode Hall Law School. She taught at Osgoode for years as a Course Director including courses such as Business Associations and Legal Process. She completed her LL.M. at Osgoode and LL.B. at Queen's Law. Vanisha's first book was published in July 2018 and her second book is set for publication in July 2019. Vanisha has published articles on a wide range of topics from corporate law to labour & employment law.
Syndicated Mortgages 
On May 9, 2019 FAIR Canada made a submission regarding the CSA Second Notice and Request for Comment relating to Syndicated Mortgages. FAIR Canada had commented on syndicated mortgages in June 2018 and wrote about some of our ongoing concerns in the May 2019 submission. We wrote about welcoming the transfer of jurisdiction in regard to regulation of syndicated mortgages from the FSCO to the OSC.

FAIR held that the addition of Form 45-106F18 was useful because it requires the addition of disclosure about the speculative nature of an investment in a syndicated mortgage. While this is an improvement, we echoed our concerns from our June 2018 submission that this risk disclosure does still not go far enough because many retail investors lack sufficient financial literacy to be proficient in financial matters associated with investments in syndicated mortgages. We re-emphasized in our submission that resources within the CSA and OSC should be allocated to encourage compliance and enforcing the rules applicable to syndicated mortgage investments once in place.

To read the full submission click here. 

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