Brokerage executives aren’t opposed to the notion of a best interest standard, but they are concerned about the practical implementation of such a standard, Andrew Kriegler, Investment Industry Regulatory Organization of Canada (IIROC) president and CEO, told conference attendees on Wednesday.
Speaking at the 2016 Quebec Compliance Conference in Montreal, Kriegler said that in meetings with several of the regulator’s district councils, and at a recent branch manager conference, he generally found that the industry supports the underlying idea of best interest standard.
“I expected to get some opposition to the very concept of a best interest standard but that wasn’t the case,” Kreigler said. “Most questions and comments were about the practical implication of implementing such a standard. Generally there was support and that is probably the case because most financial advisors want to deliver what is best for their clients.”
IIROC is committed to working with the Canadian Securities Administrators (CSA), he added, which is currently consulting on the possible introduction of a best interest standard, among a series of other reforms.
Working with the CSA, Kriegler said, “… will help ensure a consistent, high standard for all regulatory platforms — a standard that in many cases IIROC registrants are already required to meet.”
He reiterated IIROC’s contention that its rules already require firms and reps to resolve conflicts of interest in the best interest of the client. “To be sure, making these words truly ‘live’ will take more work,” Kreigler said, adding that IIROC has begun working to ensure that firms adhere to policies on compensation-related conflicts.
“Similarly, we need to ensure that the words ‘conflict of interest’ are not interpreted narrowly but broadly — as is just and appropriate,” he said. “This too will take time and may require some rewording of our rules.”
Ultimately though, ensuring that clients come first, “… can only improve public confidence in our markets and our financial system and contribute to their health and vibrancy,” Kreigler concluded.