A report from a committee of regulators detailing the results of public consultations on the issue of suitability finds that investors want firms and regulators to do more to ensure that investments being sold are appropriate for them.

The Joint Standing Committee on Retail Investor Issues (comprised of the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association of Canada, the Ombudsman for Banking Services and Investments, and the Ontario Securities Commission) held a consultation earlier this year to seek feedback on issues relating to the suitability of investment products for retail investors.

It sought feedback on what information investors want and need when making a decision to invest, as well as how they think investment products should be regulated — first through a request for responses to three questions on suitability, and then individuals who responded to the survey were invited to participate in a conference call.

The consultation found that investors believe that some of the information provided when they make investment decisions with their advisors is difficult to understand and not very useful. It also heard that there “should be greater accountability for the approval of investment products before they are sold to the public.” Some also called for better training and supervision for advisors.

The committee indicates that there are a number of regulatory initiatives underway that will benefit from the kind of investor input heard through this consultation. This effort was the first in a series to obtain retail investor input and feedback to regulatory initiatives. The next topics it will tackle, and the form of future consultations, are to be decided in January.

IE