“Big shoes to fill” at OSC, say investor advocates

“Maureen will leave big shoes to fill. She was what the OSC so badly needed, and it made great strides under her leadership,” Stromberg says.

Some of Jensen’s most notable accomplishments as head of the OSC involve efforts to improve investor protection. She championed higher industry conduct standards. She also pushed for a statutory best interest standard amid resistance from the rest of the provinces (except New Brunswick), ultimately settling for reforms designed to ensure that industry firms and reps put their clients’ interests before their own.

Under Jensen’s watch, the OSC worked to improve the representation of women on corporate boards and in executive suites. The regulator embraced the rise of fintech by creating the first dedicated fintech unit in Canada (OSC LaunchPad), a regulatory “sandbox” that enables industry innovation, and holding Canada’s first (and, so far, only) regulatory “hackathon.” And, in an effort to enhance enforcement, the OSC introduced Canada’s first (and, so far, only) regulatory whistleblower program that pays for tips about possible misconduct.

Jensen’s efforts to enhance investor protection won her lasting admiration of investor advocates.

“Investors across Canada are lucky to have had Maureen Jensen leading the OSC,” says Neil Gross, chair of the OSC’s independent Investor Advisory Panel. “She spearheaded several measures to improve investor protection, and those measures will enhance global confidence in our capital markets.

“She’s not been afraid to challenge the status quo or do what’s right. She’s gotten results,” Gross adds. “I almost pity whoever takes over — Maureen will be such a tough act to follow.”

Initially, Jensen will be replaced by Grant Vingoe, a veteran securities lawyer and current vice chair of the OSC. He is slated to become acting chair when Jensen takes her leave in April and the government seeks a permanent replacement.

When Jensen first took her position with the OSC in 2016, the future of the regulator seemed uncertain amid efforts to create a new co-operative regulator among willing provinces (including Ontario) and the federal government. Four years later, the proposed Capital Markets Regulatory Authority (CMRA) remains a work in progress, and Ontario still is officially committed to that project. But there remains a lot of work to be done if the CMRA is ever to get off the ground.

Says Frank Switzer, chief communications officer with the Capital Markets Authority Implementation Organization: “The governments that are participating in the CMRA are still considering launch timelines.”

While the CMRA remains a possibility, it doesn’t appear imminent. Whether the new regulator comes to fruition or not, the OSC is going to need a new leader in the meantime.

Investor advocates would like to see a new OSC chief who is much like the outgoing one.

Douglas Walker, senior policy counsel for the Toronto-based Canadian Foundation for the Advancement of Investor Rights (a.k.a. FAIR Canada), says the next head of the OSC should be “someone who is a champion of protecting investors through securities regulation; who has a deep understanding of the capital markets, securities law and regulation; and knows what it means to act as a public interest regulator. [That’s] an enormously challenging role. It requires someone who is truly special.”

Jensen’s willingness to push for higher industry standards and more effective investor protection brought her into conflict with Ontario’s Progressive Conservative government, which was elected in June 2018.

The first real sign of trouble between the government and securities regulators came in September of that year, when the provincial government openly clashed with the Canadian Securities Administrators (CSA) over the fate of deferred sales charge (DSC) mutual funds.

After years of consultation and research, the CSA decided to effectively ban DSC funds amid a variety of investor-protection concerns. Yet, in defiance of the traditional policy-making process — and without deference to regulatory experts — Ontario’s government immediately came out against the CSA’s proposed action, declaring that the government would seek alternatives to an outright ban.

Soon afterward, the OSC announced it would be embarking on an all-consuming effort to root out needless red tape and look for ways to curb industry compliance costs. That initiative was prompted by the priorities of the new government, which has pledged efforts to reduce regulation across all sectors.

The OSC gamely embraced those new marching orders, launching a regulatory burden- reduction initiative that ultimately delivered a report last November that featured more than 100 recommendations to cut costs, ranging from rule revisions to internal operational reforms.

Notably, the OSC insisted that none of the recommendations to reduce the regulatory burden would proceed if they compromised investor protection. Maintaining industry standards was the regulator’s prerequisite for adopting any reform that could curb compliance costs.

Even so, those efforts were welcomed by the provincial government, and seemed to signal a possible thaw in relations. In the wake of the OSC’s widely applauded burden- reduction efforts, the government seemed to be taking a less antagonistic approach toward the industry’s regulators when it signed off on the CSA’s client- focused reforms (CFRs). This series of rule changes, which would require the industry to put investors’ interests ahead of their own, is one of Jensen’s signature achievements as far as retail investors are concerned.

The friendlier tone between the government and regulators also followed a cabinet shuffle in June 2019 that brought a new finance minister, Rod Phillips, who replaced Vic Fedeli.

On the matter of the CSA’s CFRs, the Ontario government deferred to the regulators, which had spent several years developing policy, thus allowing the reforms to take effect at the end of 2019 (although the requirements will be phased in over the next two years).

Yet, the rift between the regulators and the Ontario government never fully healed. Notably, the government refused to rethink its stance on the DSC issue. Instead, in late December 2019, the CSA declared that it would move ahead with a planned ban on DSC funds this year — without Ontario.

The OSC stated it will look for other ways to reduce the harms associated with the use of DSCs without banning them entirely — such as restricting their use with elderly clients or banning leveraged DSC sales. However, that effort will now proceed without Jensen at the controls.

Jensen’s departure in April means she is ending her term 10 months early; she was slated to remain at the helm of the OSC until February 2021.

Where she goes from here isn’t clear, but she’s not retiring, according to an OSC spokesperson.

In Jensen’s message to OSC staff, she stated she will “consider new challenges and opportunities,” but that she’s ready to move on from the OSC: “This is a decision I have thought long and hard about and I am confident that it is the right one for me.”