FAIR Canada has provided its comments to the Provincial/Territorial Council of Ministers of Securities Regulators setting out why the project to permit incorporation of individual registrants of registered dealers and advisers should not proceed. FAIR Canada believes that if incorporation is allowed, it will weaken efforts to protect consumers and will result in a higher risk to the investing public and a lower risk to registrants themselves.
There are a number of significant investor protection problems within the existing framework of securities regulation that have been identified and should be a higher priority for governments and regulators than the Incorporation Project. Reforms should focus on improving investor protection rather than changing business structures so as to reduce tax liability for registrants. Allowing individual registrants to incorporate “professional corporations” will contribute to Canadians’ misunderstanding of the nature of the client-advisor relationship and will exacerbate the misalignment of obligations and expectations.
