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September 2017
FAIR Focus
FAIR Canada's Monthly Review
Investor Protection Clinic is Open

FAIR Canada is pleased to announce the opening of the Investor Protection Clinic, the first of its kind in Canada, in partnership with Osgoode Hall Law School, and with the generous support of the Law Foundation of Ontario. The purpose of the Clinic is to provide pro-bono legal assistance to people in Ontario who have invested their savings and suffered an investment loss but cannot afford to hire a lawyer to help them.
 
FAIR Canada continues its work to strengthen investor protection in Canada. We spoke on the harms associated with DSC funds at the OSC's Roundtable on Embedded Commissions. We also called on securities regulators to ensure better compliance in the exempt market.    
 
With a new Executive Director in place, we at FAIR Canada are excited by what our organization can achieve for investors. We encourage you to visit our website to view our Strategic Priorities for 2017-2020

The Team at FAIR Canada 

Investor Protection Clinic Opens its Doors
FAIR Canada in partnership with Osgoode Hall Law School and through the generous support of the Law Foundation of Ontario, has launched the Investor Protection Clinic, the first of its kind in Canada. The Clinic provides pro-bono legal assistance to people in Ontario who have invested their savings and suffered an investment loss but cannot afford to hire a lawyer to help them.
 
The Clinic will receive referrals from government, regulators and law firms, while harmed investors will be able to also contact the Clinic directly.
 
For more information on the clinic, click here.

Frank Allen joins FAIR Canada as Executive Director
FAIR Canada Chair, Ermanno Pascutto, announced that Frank Allen, a seasoned securities lawyer and executive leader, has been appointed its Executive Director. Frank begins his role effective immediately. To read the press release  click here.

To read further, please see  article from James Langton, Investment Executive.

FAIR Canada Speaks at Roundtable on Option of Discontinuing Embedded Commissions
The OSC's Roundtable on the Option of Discontinuing Embedded Commissions was held on Monday September 18, 2017.
 
The OSC Roundtable included opening remarks by OSC Chair Maureen Jensen who stated "As regulators, we are very concerned about the conflicts that arise from embedded compensation. At the same time, we have heard compelling arguments about the unintended consequences, including that an outright ban could result in no access to advice for small investors and reduced competition in the marketplace." She continued, "...we are not here to debate whether the harms for embedded compensation warrant regulatory action, but to discuss what that action should be. The status quo is not an option...."
 
Maureen Jensen also communicated that the core issue for regulators is "...with conflicts of interest , and we can't ignore the evidence that the current model does not work for many investors. We know that when commissions are embedded in investment product, advisors may be incented to recommend products that maximize their compensation and are not best for their clients. And the conflicts of interest under the current embedded compensation structure are not just limited to the advisor."
 
Marian Passmore, FAIR Canada's Director of Policy and COO was a panelist on the topic of discontinuing, or implementing additional standards for the use of the deferred sales charge (DSC) purchase option. Ms. Passmore stated "...in today's environment there is no place for deferred sales charges any longer." She  spoke of the financial incentives to recommend and keep people in DSC funds. She also mentioned the small benefits of solely removing DSCs as the redemption fee schedule would no longer exist and the cost of the upfront commission would no longer be borne by all investors in the fund. 

She also spoke about the current advice gap that exists resulting in a lack of objective, proficient advice and lack of consumer choice.    To read more  click here .
FAIR Canada Comments on Where Focus Needed in Exempt Market
FAIR Canada has  commented  on the Proposed Amendments to National Instrument 45-106 Prospectus Exemptions that would amend the report of exempt distribution set out in Form 45-106F1 Report of Exempt Distribution.

FAIR Canada is concerned about the CSA's overall regulatory focus relating to the exempt market, as the changes currently proposed indicate that the CSA will continue to focus on alleviating regulatory burden for exempt market participants rather than taking action to respond to well-documented and extensive problems associated with the exempt market. 

FAIR Canada believes that addressing these problems must be made a CSA priority, especially considering the unacceptable level of non-compliance by exempt market participants and lack of adequate information about the exempt market. FAIR Canada also offered comments in the submission on the proposed change allowing agents to sign the certification in Form 45-106F1.

Marian Passmore Named to Investment Funds Products Advisory Committee
Marian Passmore, FAIR Canada's Director of Policy and COO, has been named to the Investment Funds Product Advisory Committee for the 2017-2019 term. 

Media FAIR in the Media
James Langton of the Investment Executive reports on the launch of FAIR Canada and Osgoode Hall Law School's investor protection clinic, which has been funded by the Law Foundation of Ontario. The article outlines that the purpose of the clinic is to help investors that may have suffered losses due to misconduct or other failings. The article quotes Marian Passmore, Director of Policy and COO, that research stemming from data collection at the clinic will provide policy makers, regulators, academics and others with "currently unavailable data on issues directly affecting investors."

Investors Clinic Launched
An article in the Law Times reports on the launch of the Investor Protection Clinic, a joint project between FAIR Canada and Osgoode Hall, which was made possible through a grant by the Law Foundation of Ontario. Professor Poonam Puri of Osgoode Hall Law School is quoted in the article. 

James Langton of the Investment Executive writes that FAIR Canada has named Frank Allen as its new Executive Director. The article contains quotes from FAIR Canada's announcement, including statements by FAIR Canada Chair Ermanno Pascutto, as well as Frank Allen. The article notes that Frank Allen was a securities lawyer in private practice, who also served as General Counsel at the Ontario Securities Commission and Assistant Deputy Minister in the Financial Services Policy Division of Ontario's Ministry of Finance.

Clashing Views At Embedded Fee Roundtable
Michelle Schriver reports for advisor.ca on the Ontario Securities Commission's Roundtable on Discontinuing Embedded Commissions. The article includes comments made by Marian Passmore, Director of Policy and COO, who spoke at the roundtable on the possibility of discontinuing DSC's. Marian Passmore is quoted as saying, "Canadians often do not get objective, professional advice in their best interests today" to support the view that an advice gap already exists.
 
James Langton of the Investment Executive reports that the  Ontario Securities Commission (OSC) has announced the members of the Investment Funds Products Advisory Committee (IFPAC) for the 2017-2019 term. The article notes that Marian Passmore, Director of Policy and COO of FAIR Canada, is the sole representative of investor interests on the panel. 

Dan Healing of the Investment Executive writes that although publicly shaming violators of securities laws has not been effective, some Canadian securities regulators state they will do so anyway. Marian Passmore, Director of Policy and COO, is quoted as saying that fining and banning someone from the markets when they will not pay and were not operating legitimately in the first place, will not really do much.
Trending Trending
CSA Prohibits Binary Options

The Canadian Securities Administrators (CSA) have announced the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options, which makes it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual. To read more, click here.


CCIR Reviewing Segregated Funds Framework

Clare O'Hara reports in The Globe and Mail that the Canadian Council of Insurance Regulators (CCIR) is reviewing the regulatory framework for segregated funds to identify whether changes are necessary, particularly in light of recent regulatory reforms - such as the Client Relationship Model initiative - that affect similar investment products. To read the full CCIR news release, click here. To read further, click here

ETF Facts Now Required

Clare O'Hara reports that beginning September 1st, 2017, the Canadian Securities Administrators will require ETF providers to produce and file a summary disclosure document called "ETF Facts", similar to the mutual fund "Fund Facts" document. ETF Facts will be delivered to investors within two days after they purchase the fund, which differs from mutual-fund purchases in which the Fund Facts sheet is delivered before an investor buys a fund. The CSA expects to consider presale delivery of ETF Facts at a later date. To read more, click here.


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