An investor advocacy group has blasted the Canadian Securities Administrators for what it calls, “the glacial pace”, of regulatory reform in Canada.
Responding to the news that the CSA has set a timetable to begin implementing part of its planned initiative to alter mutual fund disclosure, the Canadian Securities Administrators published Thursday, the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada) points out that the reform has been incredibly slow in coming.
FAIR Canada notes that, in less than a year, the Hong Kong Securities and Futures Commission was able to introduce a similar disclosure document as the one being proposed by the CSA, and that it has applied it to the equivalent of mutual funds, segregated funds, ETFs, and structured products.
“On the other hand, Canadian regulators have been working on the Point of Sale initiative for the past decade and are still more than a year away from implementation,” it says. “Further, the Canadian initiative is limited to mutual funds and segregated funds — it does not apply to other high fee and complex products sold to retail investors, such as structured products and leveraged and commodity ETFs.”
“FAIR Canada continues to be disappointed with the glacial pace of investor protection reforms in Canada and the lack of investor protection initiatives taken in response to the financial crisis,” it says.
The organization does applaud the CSA for “continuing to move forward on this long delayed important initiative”, and notes that it is pleased that the existing two day withdrawal right for investors has been retained. However, it also says that there are still several serious deficiencies in the proposal “that undermine the goal of protecting consumers purchasing mutual funds.”
The weaknesses it perceives include: inadequate disclosure of risk and fees, a lack of performance benchmarks in the proposed new disclosure document, and the fact that pre-sale delivery requirements still haven’t been established.
“Delivery of the Fund Facts document should be at or prior to the sale of funds,” it says. “Investors need to know what they are buying before they buy it, not after they have bought it.”
IE
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