The Ontario Securities Commission (OSC) says that it does not have the authority to require dealers to comply with compensation recommendations from the Ombudsman for Banking Services and Investments (OBSI).
The OSC published the final version of its statement of priorities for the current fiscal year today, defending its commitment to investor protection and promising to hold a summit this fall to examine seniors’ issues. But it also declared that it couldn’t enforce OBSI’s recommendations even if it wanted to, without first amending securities legislation.
Responding to comments it received on a draft version of the statement, the OSC notes: “Some commenters have suggested that the OSC should compel payments to investors [when OBSI rules in their favour]. The OSC does not have this authority and would need legislation to expand its powers in order to force binding decisions.”
Still, the regulator reiterates its belief in the importance of having a single dispute-resolution service for investors. And it says: “The [Canadian Securities Administrators (CSA)] has committed to continue to work with OBSI to ensure it has the capacity to effectively discharge its mandate.”
The OSC also defends itself from the criticism it received from investor advocates generally, who complained that reform is taking too long, and that the commission has improperly shifted its focus from investor protection to expanding the exempt market and reducing the regulatory burden.
“We respectfully disagree,” it says. “The majority of our priorities for 2014-2015 have considerable impact on investor protection. In particular, this year the OSC will work on three transformative initiatives that are squarely focused on investor protection as it relates to mutual fund fees, final phases of the point of sale disclosure project and a best interests standard for advisors. Important work is also planned to address shareholder democracy which is a key area for investors.”
Additionally, it notes that its Office of the Investor and the independent Investor Advisory Panel (IAP) will be holding a roundtable consultation in the fall to explore senior investment issues and possible solutions.
As for initiatives, such as examining a best interest duty for financial advisors, the OSC says that the project’s future is tied to research it plans to conduct. “Once this research and analysis has been completed we will publish the results and our decision on how we plan to move forward, including timing,” it says.
In terms of its efforts to reduce regulatory burdens, the OSC says that benefits investors too. “We believe that industry compliance costs are ultimately borne by investors. If compliance costs can be reduced by removing regulatory requirements that do not impair our ability to achieve our regulatory goals, we believe that this contributes to more efficient markets. We remain committed to this priority as we believe that it benefits market participants and investors,” it says, adding that it aims to reduce the time and costs associated with compliance “but not at the expense of investor protection or good compliance.”