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Apr 11 2014

FAIR Canada Comments on IIROC’s CRM2 Amendments

FAIR Canada has submitted comments on IIROC’s proposed amendments to its rules to implement the CRM2 Amendments which will provide for pre-trade disclosure of charges and annual reporting of performance and costs and fees incurred, including the amount of payments received by third parties (such as trailing commissions). FAIR Canada recommends that the CRM2 rules be substantively and substantially the same as the CSA CRM2 amendments so that all firms, regardless of whether they are a member of IIROC…

Apr 01 2014

An Opportunity Not To Be Missed

Risk-tolerance assessment is a critical part of the know-your-client (KYC) process, yet surprisingly in Canada and most other jurisdictions, there are no standards in place for how a risk-tolerance assessment is to be conducted. This has created a gap that needs to be addressed without delay; not just to protect investors, but also to assist investment professionals in discharging their duties. Currently, dealers and individual advisors employ widely varying practices for assessing risk tolerance. Many simply perform vague and highly subjective evaluations based solely on the advisor’s “feel” after discussions with the client. Others rely on “scores” derived from answers to written questionnaires that assign numerical values to the responses and map the resulting tallies to asset allocations or model portfolios…

Mar 27 2014

IIAC Publishes Guidance Report “Canada’s Investment Industry: Protecting Senior Investors”

The Investment Industry Association of Canada report has the goal of sharing best practices that investment dealers and advisors currently use when working with senior clients. The report highlights the challenges facing firms and advisors when dealing with senior investors (for example, diminished mental capacity). In 2013, Kenmar Associates produced a report on senior’s protection which we reported here…

Mar 27 2014

Ontario Private Members Bill, the Financial Advisors Act, Passes Second Reading

You can read about the bill, and the perspectives of Advocis, the Financial Planning Standards Council and FAIR Canada here. Marian Passmore, Director of Policy and COO at FAIR Canada points out that the bill proposes to regulate financial advisors, but such advisors are already regulated by either the MFDA, IIROC or the insurance regulator. Susan Yellin…

Mar 27 2014

IIROC Issues Final Guidance on Borrowing to Invest

Barb Shecter of the Financial Post (“IIROC puts heat on dealers to protect clients who borrow to invest” and in “Will regulatory changes reduce inappropriate leveraged investing”) points out that IIROC has issued its final guidance regarding borrowing to invest. In light of the guidance, IIROC member firms will need to have sound policies, procedures and controls in place when borrowing to invest strategies are recommended by the firm and its registered representatives, whether through margin loans (“on-book”) or loans advanced from third parties (“off-book”)…

Mar 27 2014

OSC Adopts No-Contest Settlements

The OSC announced that it will proceed with four new enforcement policy initiatives, the most controversial of which is a policy to allow “no-contest” settlements. This will allow individuals and companies to settle enforcement proceedings initiated by the regulator without having to admit any misconduct or wrongdoing. The policy provides that a no-contest settlement agreement would not be available in any of the following circumstances…

Mar 27 2014

CSA Proposes a Standardized Methodology for Risk in Fund Facts Based on Standard Deviation

FAIR Canada has provided its comments to the CSA on its consultation regarding its proposed standardized methodology for risk based on a 10-year standard deviation using monthly total returns. FAIR Canada and other investor advocates previously raised concerns about the lack of disclosure and transparency with respect to the risk rating methodology used by mutual fund companies, and the resulting problem of inconsistent evaluations of risk amongst funds which prevents the risk of one fund being compared to another fund. FAIR Canada, the OSC”s Investor Advisory Panel and other investor advocates have consistently called for improvements to the disclosure of risk in Fund Facts. We commend…

Mar 03 2014

The CSA must act on critical reforms

The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) is concerned with the Canadian Securities Administrators’ (CSA) long-awaited status reports on a best-interest standard and reform of mutual fund fees that were released in December, as they contain no commitment to address the serious investor-protection concerns raised. The importance of these initiatives cannot be overstated: these are fundamental issues that affect Canadians’ ability to save for retirement and other goals. The investor-protection concerns raised in the consultation documents are real, pressing and require timely action in order to protect financial consumers…

Feb 28 2014

CBC’s Marketplace Uncovers Atrocious Investment Advice

FAIR Canada encourages Canadian consumers to watch CBC Marketplace’s investigation “Show Me the Money”. The hidden camera investigation tests the quality of financial advice in Canada. According to the CBC, the tests revealed a wide range in the quality of advisors. CBC reports that the investigation reveals that financial…

Feb 27 2014

Treat shareholders fairly when venture issuers raise capital

The majority of issuers on the TSX Venture Exchange (TSXV) are struggling to raise additional capital in today’s market. Exploring ways of modifying existing methods of raising capital so that issuers can do so in an effective and cost-efficient basis, while maintaining adequate investor protection, is much needed. As such, securities regulators are currently consulting on an initiative to allow TSXV listed issuers to raise money by distributing securities to their existing shareholders on a prospectus-exempt basis. Such an initiative is to be supported so long as mechanisms are in place to prevent abuse and ensure fairness to all shareholders — as well as adequate investor protection…

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