Regulatory reform of the U.S. financial system continues to make some progress, however halting. The Chair of the House Capital Markets Subcommittee released drafts of three bills on October 1. The Investor Protection Act would increase SEC powers and enforce a fiduciary duty; all broker-dealers and investment advisors would have to put their customers’ interests first.
There will be alternative versions of this legislation, a need to reconcile with the Senate, and a lot of political manoeuvring. Intense opposition has already caused the Obama administration to back away from a plan to force banks and other financial firms to offer plain vanilla products (like 30-year fixed-rate mortgages) alongside their more complex offerings.
We see few such pressures for wide-ranging reform in Canada. Major advances in investor protection in other countries might prompt Canadian authorities to play catch-up.
