Most securities regulators are pretty quick in responding to inquiries from member firms’ and registrants’ compliance officers (COs) and company executives, but those answers often leave something to be desired.
Of the six regulators included in this year’s Regulators’ Report Card, four saw their ratings in the “timeliness of the regulator’s response to questions and concerns expressed by its registrants” category improve significantly – by at least half a point or more.
In contrast, only two of the regulators saw their ratings rise by the same margin in the “how useful is the regulator’s response to questions and concerns expressed by registrants” category, as regulators tend to be too cautious in the content of the answers given to registrants.
In terms of timeliness, survey participants in this year’s Regulators’ Report Card noted that they typically get quick responses when they have a long-term relationship with a particular staff member or there’s someone dedicated to answering phone calls and emails.
“[If] you go through the assigned person, they’ll get back to you fast,” says a CO with a investment-counselling firm in British Columbia about the B.C. Securities Commission, which received the highest rating in the timeliness category at 8.2, up from 7.1 in 2014.
Adds a company executive with a Quebec-based dealer on the Investment Industry Regulatory Organization of Canada’s (IIROC) platform: “You have your contacts – [and] they’re good.”
But, in some cases, survey participants took issue with the fact some responses came faster than others. “[Response time] depends on the nature of the question,” says a company executive with a dealer in Ontario licensed by the Mutual Fund Dealers Association of Canada (MFDA). “If it’s a simple question with respect to logistics, it’s the same day. When it gets deeper into questions about policy, it takes forever, [with] multiple phone calls and meetings.”
Indeed, the MFDA, a self- regulatory organization (SRO), has a policy to get back to any inquiry within 24 hours. However, the MFDA points out that in situations in which the answer is more complex or may require consultation with other regulators, the final response may take a little longer.
Furthermore, the MFDA encourages member dealers to meet with staff face to face because people sometimes leave out details of a situation when writing an email or talking over the phone. And so, although meetings or additional phone calls may seem onerous to some member firms, the SRO is simply trying to provide the best answer, says Karen McGuinness, senior vice president, member regulation, compliance, with the MFDA.
“The biggest concern we have is coming back with the wrong answer,” she says.
That sense of caution sometimes leads to less than satisfactory answers – at least, in the minds of some COs and company executives. For example, many survey participants mentioned that the SROs and the provincial regulators simply point member firms and registrants to published guidelines or rules rather than responding to a query in detail.
Nevertheless, IIROC received a rating of 7.5 in the usefulness category this year, up from 6.5 in 2015. Specifically, COs and company executives at IIROC-licensed dealers point out that this SRO is generally forthcoming with answers and does provide solutions – although these answers may not be as detailed as desired.
“IIROC’s responses are more fully informed [than those of other regulators],” says a chief CO (CCO) with an Ontario-based investment dealer. “[There’s] less [staff] turnover and they are closer to dealer members.”
In an email, IIROC told Investment Executive (IE) that the SRO “has several formal and informal channels available to help members and registrants understand and comply with our rules and to respond to their inquiries in a practical, timely and relevant manner.”
As examples, the SRO points to its standing committees, district councils and annual conference in addition to staff.
The Ontario Securities Commission (OSC) also saw significant improvement in its rating for the usefulness category to 5.6, up from 4.7 in 2015. Yet, more work remains for the OSC, as many COs and executives feel that this regulator’s responses often are unclear – although some survey participants admitted that being blunt can be tricky for the OSC.
“Their hands are tied,” says a CCO with a mutual fund dealer about the staff at the OSC. “They have to say what has been said publicly. A lot of the times, you [already] know what’s out there.”
The OSC, for its part, stated in an email response to IE that the regulator communicates with registrants through a registrant outreach program, through which members can attend sessions on specific topics in person, remotely or via the OSC’s YouTube channel at a later time. As well, registrants who sign up for the OSC’s registrant outreach community can receive updates on policy developments and guidance.
“[The program] facilitates an interactive and open dialogue between registrants and the OSC and provides registrants with useful, practical information on compliance-related matters that will have an impact on their work,” the OSC stated in its email to IE.
Survey participants whose firms are regulated by the Alberta Securities Commission (ASC) felt much the same as their counterparts in Ontario. Specifically, Albertan survey participants said they’ve noticed some improvements over the past year, but still feel responses could be clearer.
“[The ASC] is getting a little better, but you have to figure out the answer yourself most of the time,” says a CCO with an Alberta-based mutual fund dealer.
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