The ontario securities Commission has received more than 130 applications for membership in a new committee it has established to give retail investors a direct voice.

“You rarely get individual investors’ input on policy initiatives or operational matters because they’re not organized in a way to make that possible,” says Susan Wolburgh Jenah, acting chairwoman of the provincial regulator. “This committee was created to give investors an opportunity to raise issues with us, to give us an opportunity to raise issues with them and to get their perspective, which I don’t think we’ve always done.”

The investor advisory committee is intended to balance out a number of other OSC committees, none of which speaks directly for individual investors. The IAC’s mandate will be to help the OSC identify and address investor issues.

The committee will have 10 to 12 volunteer members drawn from consumer
organizations, academia, the investment media and other invested parties. The OSC says it will appoint members based on their knowledge of capital markets and their experience in working with investors, as well as their knowledge of relevant issues.

IAC members will serve two-year terms, meeting for half-day sessions every quarter.
The OSC says it will select inaugural members by Nov. 22; the committee is expected to meet for the first time before the end of November.

“The committee will change over time; it’s not going to be static,” says Wolburgh Jenah. “We propose to do evaluations after we get it up and running. We want to make sure it’s working from the point of view of the commission, and that people are participating.”

The OSC had indicated it would create a consumer committee after a town hall
meeting last May in Toronto drew a number of investors, many frustrated by both their investment experiences and in seeking redress from regulators.

“We need to do a better job to explain to [investors] what [each regulator’s] role is,” says Wolburgh Jenah. “We can be more proactive in following up on complaints that come to us that we, in turn, can refer to the Investment Dealers Association of Canada or the Mutual Funds Dealers Association.”

Stan Buell, president of the Markham, Ont.-based Small Investor Protection Association, feels there is a place for such a committee. “I think it’s a good initiative on the part of the OSC, and I would hope that it will serve a need,” he says.

The OSC consulted with a number of self-regulatory organizations in creating the IAC.
Representatives from the IDA, the MFDA and the Ombudsman for Banking Services and Investments will be invited to attend IAC meetings as observers.

Ross Sherwood, chairman of the IDA and CEO of Odlum Brown Ltd. in Vancouver, sees the IAC’s creation as part of a wider effort on the OSC’s part to communicate with investors. “This is part of expanding the consultative process and having it at an earlier time,” he says. “[This move] is good for the capital markets, the clients and the industry.”

Wolburgh Jenah adds that a committee that gives investors a voice can only be good for the investment industry. “If people lose confidence, it’s not in the best interest of the markets,” she says. “We want to encourage participation in a fair, robust and efficient market. Every stakeholder has an interest in making sure that’s the kind of market we create.”

Ed Waitzer, chairman of Stikeman Elliott LLP in Toronto and a former OSC chairman, also thinks it’s a good idea. But, he says, the challenge will be in actually effecting change. “I would hope there is some accountability,” he adds.

In Britain, investors are represented by the financial services consumer panel, which
works independently of the national regulator, the Financial Services Authority. The panel was created almost seven years ago under the Financial Services and Markets Act.

“We think the panel has been very effective,” says FSA spokesman Robin Gordon-Walker in London. “It provides us with a lot of commentary, accountability and a check on the FSA. [Its members] have the official right. If they think something’s completely against consumers’ interests, they can register a formal complaint and be assured of a formal response — although this has never been used.”

Wolburgh Jenah says the FSA consumer panel was not used as a model for the IAC.
“It is an advisory committee,” Wolburgh Jenah says of the IAC. “I want to make it very clear this isn’t a committee that has [any] power. We’re not delegating to this committee our responsibility for carrying out our mandate.”

@page_break@Despite its lack of teeth, the IAC will play an important and effective role, she says: “We’re going to have someone chair these meetings who will be independent of the other representatives of the committee and of the OSC. It’ll be a facilitative process.
It’ll be orderly. There will be a focus.” IE