FAIR Canada has written to Premier Dalton McGuinty and Finance Minister Dwight Duncan, urging the appointment of a proactive investor-focused OSC chair. The selection of an investor-focused OSC Chair is crucial at this time, with the term of the current chair ending on October 31 – less than 3 months away. 

FAIR Canada disagrees with the argument that the position of the OSC Chair is not as important or attractive with the impending establishment of a national commission. In fact, this may well be the most important OSC Chair appointment in modern times. 

National Commission

The move to establish a national commission will lead to an overhaul of the securities regulatory system in Canada. Meaningful protection of investors can be set back further without a strong OSC advocating for investor interests in discussions about the structure and legislative framework governing the proposed national commission. 

Canada Needs to Catch Up to the US and Other Leading Jurisdictions

The people of Ontario and Canada cannot afford to wait several more years while the debate over the national commission is resolved, legislation enacted and an agency established and staffed. Canadian investors need and deserve better investor protection now.

Ontario and Canada have fallen behind other major jurisdictions in investor protection.

Governments and securities regulators in the US, the UK, the EU, Hong Kong and Australia have implemented major investor protection enhancements since the financial crisis. Regulatory organizations have re-dedicated themselves to the protection of investor rights. While great progress is being made in many other leading markets, there have been very few meaningful improvements to investor protection in Canada. 

Legislative Report on OSC 

Appointing a proactive investor-focused Chair will be a good start towards addressing the recommendations in the Report of the Standing Committee on Government Agencies on the OSC, which stated that “In the minds of most Ontarians, the Commission is the public’s guardian in the capital markets”.

The savings and financial security of the people of Ontario depend on the integrity of the financial markets and of the financial industry. The new Chair must be someone who understands that relying almost exclusively on “disclosure” to protect investors does not work. Regulators must take a more proactive role and use substantive measures to protect investors. It is not enough to require complex legalistic disclosure and shift responsibility onto unsophisticated retail investors.

The OSC 

The OSC will form the largest part of a new national commission, particularly if Alberta and Quebec continue to oppose the creation of a national commission. With a dynamic new Chair, Ontario can deliver an energized and vital agency with a successful track record of enforcement and investor protection. With a “caretaker” Chair, the morale and quality of staff at the agency will likely  deteriorate.

Qualifications for Incoming OSC Chair

FAIR Canada believes that the following factors should be strongly weighted in evaluating potential OSC Chair candidates:

• A track record of successful leadership, particularly in an organization undergoing major changes, and with a clear agenda for revitalization of the OSC as an investor-focused organization.
• A proven track record of focusing on investors and of making investor protection a top priority.
• An agenda that prioritizes issues of importance to investors, including introducing a duty of registered advisors to act in a client’s best interests, and better protection for retail investors in the sale of exotic products (such as leveraged and commodity ETFs), mutual funds and complex high fee products.

With Mr. Wilson’s term coming to an end soon, there has been no news from the OSC or the Ontario Government on the search for a new Chair. At this crucial juncture and with less than 3 months to go, the Ontario Government must be proactive in identifying and recruiting the most qualified candidate.