March 2021
FAIR Focus: We Are Changing
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FAIR Canada was established in 2008. Since then, we have published more than 130 newsletters highlighting key milestones, new developments, and our advocacy work for investor and shareholder rights in Canada.  
This month, we are introducing a new style in our newsletters – one that speaks directly to investors about your rights and how regulatory changes impact you. We also highlight emerging issues you should be aware of as you seek to invest your hard-earned money. 
Please let us know what you think by writing us a note at We look forward to your feedback. 
We will also be redesigning the format of our newsletter, together with our website, over the coming months. So be sure to be on the look-out for the changes. We hope you like them.  
New Investor Rights and Protections Coming
FAIR Canada has long advocated for the right that investors be treated fairly and honestly. This month, we focus on rule changes that benefit all investors, including Canadians that purchase mutual funds, stocks, or similar types of financial products (known as securities).
The changes are based on what seems like a simple and obvious idea – that your interests should come first when you pay someone to help you buy or sell a security. However, in many cases, this simply is not true. The new rules ensure those working in the securities industry put your interests ahead of their own.
A number of these changes will take effect later this summer, others will take effect at the end of the year. You should be aware of how these changes impact you.
Summer 2021 – New Conflicts of Interest Rules!
What is a Conflict of Interest?
As an investor, you have the right to receive advice that is suitable to your personal situation. You also have the right to expect the person recommending what security to buy (or sell) is competent, knowledgeable and understands what they are selling you. We’ll call that person your advisor (the legal term would typically be either a “dealing representative" or “advising representative”). 
Your advisor is required by law to deal with you fairly, honestly and in good faith. The concept of good faith means that he or she should not take advantage of your personal situation, including the fact that you may not know much about financial products.
As with other things you might buy at a store, your advisor might get paid more to sell you one type of security than another. For example, your advisor might be paid a higher commission for selling a certain type of mutual fund. This may create a situation that is not much different than the car salesman trying to sell you the most expensive car on the lot, even if it’s not the most suitable for you.
This dynamic is a conflict of interest between you and your advisor. While most take their responsibilities seriously, there are some that focus more on their interests (getting paid more), and not on your interests (buying the most suitable and best priced product).

How Will the New Rules Help You?
Beginning June 30, 2021, new rules take effect that require your advisor to resolve these types of conflicts in your favour, or best interest, and not theirs. In other words, if there is a product that is suitable for you, but requires you to pay your advisor lower fees, then your advisor should be recommending you buy the cheaper product.    
The rules also require your advisor to identify and tell you about any noteworthy conflicts in a timely manner. Importantly, regulators have emphasized that “telling you” means more than simply including information in your account opening form or other written document.   
Your advisor also needs to avoid material conflicts of interest that cannot be addressed in your best interest. So be sure to ask them about any conflicts at the time you are getting advice. This could include asking your advisor about the fees you will be charged and how he or she will be paid.  
Winter 2021 – Information That Affects You!
Relationship Disclosure
Beginning December 31, 2021, you should begin receiving more helpful information after you open an account with an advisor. The additional information is intended to help protect you and ensure you have relevant information to make a good investment decision. It will also help you understand the full story behind what your advisor is telling you.   
This information should prompt you to consider the following critical questions:
  • How is the advisor getting paid? 
  • Do they get a fee up-front, or do they get a fee later when you sell? 
  • What is that fee based on?
  • Will they be receiving benefits from anyone else when you buy the security?
  • What are all the expenses and charges associated with the product you buy?
  • Apart from sales commissions, what other expenses or charges will you have to pay?
  • How do any of these commissions, expenses or charges impact your investment? 
  • Are there any “trailing commissions” that reduce the amount of returns or the value of your investment?
  • Can you sell your securities whenever you want? 
  • What type of restrictions come with the securities you may buy?
  • Can they be sold right away, or do you have to wait a certain amount of time?
  • Will you have to pay a penalty when you sell them?
  • What is the range of products and services your advisor offers? 
  • What kinds of investment products and service do they offer?
  • What kinds of products and services do they not provide?
  • Can they offer you a complete range of suitable investment products?
Misleading Communications
Beginning at the end of this year, advisors will also be prohibited from misleading investors about their know-how, experience, or qualifications. 
The new rules will forbid them from using titles like “Vice-President,” unless they are an officer of the company with those responsibilities. In other words, an advisor cannot simply call themselves “Vice-President” because it makes them sound important. 
This rule is intended to reduce confusion and clarify the advisor’s actual experience and qualifications. While helpful, you should know that this rule is limited in scope and advisors will be able to continue to use many other titles on their business cards. So be sure you really understand what they do and do not be fooled by the fancy titles they give themselves.

Ontario Provincial Budget – March 24, 2021
The Ontario government will release its budget later this week. FAIR Canada will be reviewing it carefully to see what recommendations, if any, the government intends to adopt from the final report published by the Capital Markets Modernization Taskforce.
In January 2020, the Ontario focused Taskforce made 74 wide-ranging recommendations but provided little analysis on their respective merits or costs. It also proposed very aggressive timelines for implementing many recommendations, precluding the possibility of meaningful public feedback.
Depending on how the Government chooses to respond, it could be a question of good or bad news for you as an investor.
For example, one recommendation that would benefit investors living in Ontario (and reduce further victimization of investors generally) relates to recommendations made by the Ombudsman for Banking Services and Investments (OBSI). If adopted, any OBSI recommendation to financially compensate an Ontario investor would be binding on the firm or individual they were dealing with. The firm or individual could no longer ignore the Ombudsman or low-ball the investor. This would be a welcomed development, at least in Ontario, for addressing this long outstanding problem.
On the other hand, the Taskforce issued a stark recommendation that, within 6 months, public companies could stop delivering information that the regulators and FAIR Canada believe are important to protect investors.
According to the Taskforce, if public companies posted the information on their websites, investors living in Ontario would be considered to have received delivery of the information. The companies would not even have to provide any notice that they posted the information. This approach may reduce the burden on public companies, but it certainly does not help investors.
Although this idea of “access equals delivery” has been debated before, no one has ever suggested taking it this far. If adopted as recommended by the Taskforce, it would represent a major step backwards and undercut a core tenet of securities law – that investors should be provided with full and timely information to make informed decisions. FAIR Canada does not support the “access equals delivery” approach proposed by the Taskforce.

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