The Ontario Securities Commission’s controversial fair dealing model is being scaled back to focus on the four areas that it believes require most urgent reform.

The announcement was made by OSC chairman David Brown at the Investment Dealers Association’s annual conference in Mont Tremblant, Que.

Brown was participating in a roundtable on regulatory priorities with British Columbia Securities Commission chief Doug Hyndman; Ann Leduc, new secretary-general of the Canadian Securities Administrators; and Steve Sibold, chairman of both the CSA and the Alberta Securities Commission.

In an update on the OSC’s latest thinking on the FDM, Brown said there has been extensive industry consolidation and input from six working groups, which have been wrestling with the OSC’s effort to shift the regulatory focus from transactions to advice. He said the OSC has decided to narrow the scope of the project to four key areas: the clarity of the relationship between the client and the broker; the management of conflicts; the transparency of compensation and conflicts; and, the transparency of performance reporting to clients.

He didn’t offer any detail on what its plans are for these areas, but said that over the next few weeks the OSC hopes to target the working groups on those specific areas. He added the OSC will also be working with the IDA and the Mutual Fund Dealers Association to develop its ideas.

Brown also discussed the OSC’s effort to resolve the investor protection concerns it has with the mutual fund dealer-investment dealer business arrangements. It is seeking industry input to help come up with solutions to these problems.

In a question and answer session, one conference participant assailed Brown for the amount of time and energy the industry has expended on these proposals (particularly for the small firms), complained that some of the concept paper’s elements were simply unrealistic to implement, and asked whether it planned a full cost-benefit analysis of its proposals.

Brown responded that the FDM originated with industry participants complaining about the regulatory focus of the current system, and he noted that industry participation to date has been invaluable in focusing the original concept paper. He also said that a cost-benefit analysis of any proposals will be forthcoming, too.