Industry trade group the Investment Industry Association of Canada (IIAC) is pushing back on the Ontario government’s proposal to reduce the standard consultation period for regulatory rule making.
In a letter to Peter Bethlenfalvy, provincial finance minister, and Parm Gill, minister of red tape reduction, IIAC calls on the government to reconsider its proposal to cut the standard comment periods for policy proposals by the Ontario Securities Commission and the Financial Services Regulatory Authority of Ontario to 60 days from 90.
IIAC said that, while the goal of faster, more responsive rule making is a good one, that goal won’t be achieved by giving the market less time to assess regulatory proposals.
“The focus of effective policymaking should be on getting things right,” it said. “Regulators cannot risk pushing through, or being perceived as pushing through, a regulatory agenda quickly.”
“A 60-day consultation period gives little time for the public to analyze and respond to proposals that regulators, and their many staff, have taken a much longer time to put together without the benefit of full public input,” it said. “It gives the appearance of an unlevel playing field with a pre-determined result.”
IIAC argued that the minimum consultation period should be 90 days, and that this should be reduced only in a crisis that requires swift action to ensure the stability of the financial system — such as a significant market disruption.
“The time allocated to the consultation process should be seen as an investment in better rules and regulations,” IIAC said in its letter.
“Shorter deadlines hamper the quality of the process,” it argued. “Stakeholders may not be able to fully address the issue or may opt not to comment at all so that regulators lose out on the awareness, understanding and detailed knowledge of market participants that are essential ingredients to good regulation.”
Additionally, IIAC said reducing the minimum consultation period “moves away from the spirit of accountability and threatens the already lagging public confidence in the integrity [of] regulatory rule making practices.”
“The first step to cutting red tape and reducing the regulatory burden is to base regulatory proposals and decisions on robust cost-benefit analysis and a meaningful, informed assessment of risk, that is open to public scrutiny,” it said.
Moreover, it argued that the proposal to reduce the minimum consultation period should be subject to a regulatory impact analysis of its own that considers the direct and indirect costs, and compliance costs that would result.
“On its face, the proposal to shorten the consultation period brings regulatory burden, compliance costs, direct and indirect costs, and no benefit,” IIAC said. “Rules and regulations that are rushed, without thorough cost-benefit analysis, consideration of alternatives and clear public accountability risk negative outcomes for investors and markets.”