Sections of the proposed federal anti-spam legislation threaten to hamper effective practices used by advisors to gain new clients and by firms to recruit employees, the mutual fund industry argued to a House of Commons Standing Committee on Monday.

Joanne De Laurentiis, president and CEO of The Investment Funds Institute of Canada, and Paul Vaillancourt, an independent financial consultant based in Ottawa, presented a formal statement to the Commons Standing Committee on Industry, Science & Technology on the impact of the Electronic Commerce Protection Act, or Bill C-27, on the mutual fund industry.

Vaillancourt argued that the proposed Section 6, which prohibits one-to-one emails of specifically directed marketing communication, targets activity that is not intrusive into the lives of recipients and does not create economic harm.

“My clients are my best sources of new business,” he said in the presentation. “A financial advisor like me regularly sends an email as a follow-up to a referral from an existing client to a friend or family member who is looking for a financial advisor. In fact, such referrals are crucial to my business.”

He said Section 6 should be limited to those who target individuals or entities through mass emails where there is no reasonable identifiable relationship between the recipient and the sender.

“Where the recipient has been referred to the sender there should be a specific exemption allowing the sender to contact the referred individual or entity,” Vaillancourt said.

De Laurentiis said Section 6 would also present problems for mutual fund industry firms, since they commonly use email to communicate employment opportunities.

“One way our members grow is by recruiting new financial advisors through electronic communications,” she said. “We propose that Section 6 be amended to include an exemption for electronic communications that have as its sole purpose information regarding legitimate employment opportunities.”

In addition, De Laurentiis argued that the proposed penalties were excessive and out of scale to the potential harm caused by a breach of the legislation. The penalties include fines up to $1 million for individuals and up to $10 million for companies found to have violated the legislation.

De Laurentiis said IFIC supported other sections of the bill, including those that combat and punish illegal and harmful activities and that damage the trust surrounding electronic commerce. In particular, she said IFIC supported the recommendations in sections 7 and 8 of the bill, regarding the prohibition on the altering of transmission data and the unauthorized installation of computer programs on another’s computer.

In addition, IFIC supports the proposed amendments to the Competition Act to prohibit misleading commercial emails, and amendments regarding the use of emails collected through selected computer programs.

De Laurentiis said several simple amendments to the bill would better balance the protection of individuals and businesses from unwanted emails, while still allowing responsible communications by legitimate businesses to their potential clients and customers.

In particular, IFIC calls for exemptions and safe harbours for referral business, ongoing fiduciary relationships, business-to-business communication, employment opportunities, and established social networking relationships.

IE