A new voice?

Although those are all good optics, it’s not yet clear what that really will change for investors. Thus far, the new branch has had a slow start. Initially, the OSC promised to get the OI up and running by the beginning of the current fiscal year (last April 1), but no one was hired to head the branch for several months. The OI’s director, Eleanor Farrell, took up her post on Sept. 10.

Now, almost a year since the OSC unveiled its plan for the new division, the average investor may well be hard pressed to know that the OI branch exists. It doesn’t have any presence on the OSC’s website yet – although, Farrell says, that’s coming. For now, there’s just an email address.

Indeed, the new OI is largely a one-woman show at this point. And although Farrell reports that she does expect to be able to add some staff in the months ahead, the expectation is that the OI will remain a modest enterprise. The branch, rather than building a large team of its own, will be leaning on the work of the OSC’s various other branches and its existing investor-focused bodies – the Investor Advisory Panel (IAP) and the Investor Education Fund (IEF), which are both independent of the OSC – in order to fulfil the OI’s mission.

That mission, writ large, is to do a better job of engaging ordinary investors and ensuring that the investor perspective is taken into account in everything the OSC does in terms of policy and strategy. The OI also will serve as a sort of clearinghouse for the investor perspective within the OSC, Farrell suggests – collecting and analyzing any sort of investor-focused research that is done within the OSC, the IAP and IEF, then serving as a resource within the regulator for that sort of insight.

“We want to make [policy] decisions based on evidence, not just anecdotal [information],” Farrell says, “so, certainly, research is going to be a key focus. It really is a question of taking the research, taking the information we get from engaging with investors, and figuring out what changes can we make to improve regulation and education for investors.”

Although these are noble goals, the OI is still in a tricky spot because a tiny, new branch may have a hard time gaining influence over larger, well-established branches within the OSC that have been toiling on investor issues for years. And even if the OI gains some sway over OSC policy-makers, the prevailing provincial regulatory system routinely weighs against rapid reform.

Nevertheless, Farrell reports, the new branch has been well received within the OSC.

“So far, the reception within the commission has been nothing but positive,” she says, noting that there’s a genuine enthusiasm for investor protection among the OSC’s top executives, including chairman and CEO Howard Wetston, vice chairwoman Mary Condon and executive director and chief administration officer Maureen Jensen.

Farrell, a securities lawyer, has a background in investor issues – albeit largely on the institutional side. Prior to joining the OSC, she managed the corporate governance team at the CPP Investment Board. She also has worked on corporate governance issues at the Canadian Coalition for Good Governance and the Pension Investment Association of Canada.

“In terms of getting people to care about investor protection,” Farrell says, “there is certainly no shortage of that. That is clearly the focus of the organization.”

Yet, at the same time, the creation of an investor-focused branch risks raising investors’ expectations unduly. Now that investors have a proxy sitting at the OSC’s head table, investors may anticipate that issues long complained about – such as the lack of access to affordable restitution or the need for a statutory fiduciary duty – will be pushed along much faster.

Farrell concedes that there is some risk that investors will expect too much too soon from the OI; and she is quick to cool those hopes: “Certainly, when you look at some of the investor advocates, they would love for things to change overnight, but I don’t know [if] that’s realistic.”

Longtime investor advocate and newly appointed member of the IAP, Ken Kivenko, says that he’s “cautiously optimistic” about the OI’s ability to make a difference for investors.

On key investor issues, Farrell says, the OI will be taking policy positions and advocating for them within the OSC. She also hopes that the OI will be able to facilitate discussions between investors and the investment sector as a way of reaching compromise solutions on contentious proposals, aided by the OI’s research efforts.

“One of things that research does is answer the roadblocks that are put in front of you,” Farrell says, adding that the hope is that the OI will be able to help counter concerns about regulators’ plans by offering facts.

“Taking research and saying, ‘This answers these points’ and having roundtables where it might be useful,” she suggests, “that would be the way that we would try to move things a bit faster.”

However, investors should not expect any miracles. It’s not realistic, Farrell says, to think that the OI really will be able to push initiatives that have otherwise stalled. Moreover, she adds, she doesn’t see regulation as necessarily the answer to everything. In many cases, she suggests, more investor education may be what’s needed.

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