Newsmaker: Regulation, with a global focus

Reid, 48, has been actively involved in financial services regulation at the international level since 2004. Most recently, he was appointed chairman of the subcommittee on resolution issues for financial co-operatives at the Switzerland-based International Association of Deposit Insurers (IADI) in late 2014.

In that latter role, Reid is leading efforts to develop a tool box that deposit insurers and resolution agencies can use when resolving issues involving credit unions (CUs) and financial co-operatives. It’s an initiative that is long overdue, Reid says, to help to ensure depositors in all jurisdictions are properly protected in the event of the failure of a co-operative or a CU, taking into consideration the unique characteristics of these organizations.

“There are big differences in structure and governance between banks and financial co-operatives or credit unions,” Reid says. “The IADI is going to be the first international standard-setter to focus on financial co-ops and credit unions. We’re very excited with that project.”

Reid’s position with the IADI is just the latest in a series of roles he has held with international regulatory organizations. His work has spanned many diverse elements of the financial services sector, including insurance, financial crime, deposit insurance and corporate governance. Reid’s role at the AMF spans a similarly broad range of regulation, including prudential and capital oversight of financial services institutions and deposit insurance.

Reid’s work abroad reflects the AMF’s practice of maintaining an active presence in the international regulatory arena, as well as his own desire to be involved in such high-level decision-making.

“It has always been important for the AMF to be involved at the international level,” Reid says, “bringing our expertise and our thoughts, and trying to influence and be part of the driving of best practices that will be implemented throughout jurisdictions.

“For me,” he adds, “it’s very important, because you’re at the table where everything is decided, and you can influence the discussions.”

This international-level work has become particularly important since the global financial crisis of 2008-09, he says, which highlighted the risks posed by increasingly interconnected global markets and by systemically important financial services institutions that are active in multiple jurisdictions. The resulting push toward international regulatory standards has provided jurisdictions around the world – including smaller ones, such as Quebec – with an opportunity to collaborate and learn from one another, Reid says.

“It leaves a place for small jurisdictions to be at the table,” he says. “[The AMF] has had our own experience, and we have expertise that we can share that can be helpful to others. And we also gather a lot of expertise and a lot of information from other jurisdictions.”

Reid’s main area of focus on the international regulatory stage has been insurance and, specifically, market conduct and the fair treatment of customers. He was chairman of the market conduct working group at the International Association of Insurance Supervisors (IAIS) for almost five years, until October 2014.

In that role, Reid oversaw the revision of the components of the IAIS’ international regulatory standards – known as the Insurance Core Principles (ICPs) – pertaining to intermediaries and conduct of business. The working group also published resources that aim to help regulators meet these standards, which relate to such elements of oversight as the selling and handling of insurance products and services, disclosure of information to customers and intermediaries’ behaviour when dealing with clients.

The ultimate goal of those efforts, Reid says, is to equip insurance regulators with the tools they need to ensure consumers are protected appropriately in their interactions with insurance advisors and industry firms.

“It’s to make sure that insurers implement a culture of fair treatment of customers in everything they do,” he says. “Policyholder protection is key, because the industry is based on confidence. If you don’t treat the customer fairly, the customer will lose faith in the industry, or in products.”

In the past, Reid says, regulators generally have paid too little attention to this side of the regulatory framework. “In a lot of jurisdictions, you find ‘twin peak’ structures, in which the prudential side – governance risk, management and compliance – is very developed, but with regards to conduct of business, [that has been developed] a little bit less.”

However, he says, the work that the IAIS has done in recent years has helped to make business conduct risk and consumer protection a higher priority in the insurance industry.

“There has been a lot of work going on in the past few years,” he says. “[Regulation of business conduct] is taking the place it deserves in the regulatory framework.”

As international regulatory standards have expanded in recent years and jurisdictions have taken steps to comply, Reid acknowledges, keeping up with the rapid pace of regulatory change has been a challenge for insurance industry players. In Quebec, for example, the AMF issued more than 20 regulatory guidelines between 2009 and 2014 in order to comply with international standards.

“A lot of guidelines and a lot of expectations were published in a short period of time,” he says. “We know it’s been a challenge.”

Reid says it’s important for regulators to adapt the international standards to their own jurisdictions and ensure that these standards are applied in such a way that they enable the sector to continue to function effectively.

He has been involved in helping Canadian regulators achieve this goal through his work with the Canadian Council of Insurance Regulators (CCIR). Reid spent two years as chairman of the CCIR’s committee responsible for implementing the IAIS’ latest set of ICPs, which were adopted in 2011.

“It’s a question of finding the right balance between the international requirements and the industry,” Reid says, “making sure there is a level playing field and that we have a sound and profitable market here in Quebec and in Canada.”

Despite the challenges, Reid believes the regulatory changes in recent years – particularly with respect to market conduct and the fair treatment of customers – are positive for the industry. “I think it’s going to be beneficial for supervisors, regulators and the industry as a whole,” he says.

The opportunity to be involved in these kinds of regulatory changes is what attracted Reid to the regulatory arena. He spent almost 14 years practising law at major firms early in his career, with a focus on litigation, banking, insurance and finance. He was eager for a change of pace when he was offered a position with the AMF’s legal affairs team in September 2004 – just seven months after the regulator was established.

“I worked on very interesting files on securities law, and new acts that were adopted at the time,” Reid says.

In the years since then, Reid’s passion for the work has continued to grow: “I think it’s very meaningful and important work that we’re doing as regulators.”

Given the extensive work that Reid has taken on at the international level, he spends much of his time travelling.

In his time off, Reid relishes the opportunity to spend time in his hometown of Quebec City with his spouse and two daughters. He enjoys such activities as hiking, cycling and skiing.

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