The Ontario Securities Commission (OSC) is reiterating its pledge to address several critical policy issues for retail investors in the year ahead in its final statement of priorities, published on Thursday.
The statement of priorities set out the regulator’s agenda for its current fiscal year (which ends March 31, 2018) and includes a commitment to introduce a best interest standard for financial advisors alongside regulators in New Brunswick as well as support the series of “targeted reforms” that other regulators are promising.
On the issue of embedded commissions, the regulator notes that the “current embedded fee model is not well understood by investors” and that it gives rise to conflicts that could harm investors. Yet, it stops short of promising to ban these structures.
“The OSC remains committed to achieving an evidence-based resolution to the use of embedded compensation structures,” the statement of priorities says. “Following further dialogue with stakeholders the OSC will develop and present policy options and recommendations to the commission and [Canadian Securities Administrators] chairs later this year.”
The OSC also reports that it has received “strong support” for the idea of strengthening the powers of the Ombudsman for Banking Services and Investments (OBSI). The latest independent review of OBSI recommends that it be given the power to impose binding decisions. In its priorities, the OSC says that, in the year ahead, it will analyze those recommendations, along with other input, in determining a response.
In addition, the provincial government has decided to give the OSC oversight of syndicated mortgages since the OSC published its draft priorities in March, so this has been added as a new priority for the regulator.
Its other new priorities for the coming year also include improving the collection of monetary sanctions; accommodating the growth of fintech; and reducing the regulatory burden.
For the current fiscal year, the OSC is budgeting for a deficit of $1.9 million as expense growth is expected to outstrip revenue. Indeed, it’s forecasting that revenue will decline by 3.5% from last year and that expenses will grow by 8.5%. The projected deficit would reduce the OSC’s surplus to $38.7 million by March 2018.
“Fee rates will be reviewed in fiscal 2018 and the existing surplus will be taken into account in determining new rates,” the OSC notes.
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