October 9, 2008
Joint Standing Committee on Retail Investor Issues
c/o Ontario Securities Commission
20 Queen Street West
Suite 1900, Box 55
Toronto, ON M5H 3S8
Re: Product Suitability Consultation
We refer to the consultation by the Joint Standing Committee on Retail Investor Issues (“JSC“) which requested responses by October 9, 2008.
We found the questions to be far too general and open ended for the responses to be of much use. We believe that the consultation would benefit from a clearer articulation of the reasons for and objectives of the consultation.
The following are the 3 questions posed in the consultation and our comments:
(c) the product is suitable for the investor?
Clearly products should not be sold by registrants to retail clients where the product is not transparent, where the client is not able to understand the product (including the risks involved) or where the product is not suitable for the client based on the client’s circumstances.
As a general matter, based on feedback we have had from investors, investors need more action from regulators, not more public consultations. Broad consultations in the guise of being able to say that the regulators are doing something diminish regulators credibility. Where consultations are conducted they should be more focused.
Further, where the regulators do conduct a public consultation and are genuinely interested in investor input, a 30-day comment period is far too short. We recommend that the standard consultation period be 60 or 90 days (depending on complexity etc.) in the absence of some urgency or need for timely action.
If the JSC is interested in investor feedback, we recommend that the JSC form an investor committee composed of representatives of investors/consumers such as the Consumer Council of Canada, the Small Investor Protection Association, CARP, etc. We would be pleased to participate in such a forum.
We note that the OSC has 9 advisory committees with well over 100 members. We do not see any meaningful investor representation on any of these committees. The OSC may wish to consider having investor representation on some of these committees.
CANADIAN FOUNDATION FOR ADVANCEMENT OF INVESTOR RIGHTS
Attach: FAIR Canada Letter of September 29, 2008 on SPACs