At today’s Quebec Public Finance Committee hearings on mutual funds, National Bank presented several recommendations for maintaining balance between investor protection and development of the industry.

Charles Guay, senior vp – mutual funds at National Bank, pointed out that investors in Quebec still have confidence in mutual funds. “In fact, their investments have increased in value by more than $30 billion over the past three years,” he stated. Guay added that the way to maintain balance between investor protection and industry development is to refrain from imposing an excessive number of regulations, which would only stifle industry development. He also stressed the need to harmonize legislative and regulatory initiatives in Quebec with those undertaken by securities regulators in the rest of Canada.

In order to adequately protect investors, National Bank believes that the Autorite des marches financiers (AMF) should be given broader powers with regard to public enquires and criminal prosecution so that it can return misappropriated funds without having to go before the civil courts.

National Bank also believes that extending the scope of the work of external auditors would provide added protection for investors. Establishing a five-year relevant experience rule for the accountant in charge of an external audit and rotating auditing firms after four or five years are other measures proposed by Guay.

Guay also recommended imposing stiffer penalties for infractions, which the AMF had called for last fall. He added that whistle blowing was not prevalent because of the lack of protection offered. “We believe that, with better support, whistle blowing would be an important safeguard against fraud.”