The Ontario Securities Commission is working on a discussion paper examining whether to impose a fiduciary duty of dealers and advisors, the regulator said Monday.
In a staff notice detailing the work of the OSC’s compliance branch over the past year, the commission indicates that it is “considering whether an explicit legislative fiduciary duty standard should apply to dealers and advisers in Ontario”.
The OSC promised earlier this year, in its statement of priorities, that it would study the issue. That pledge came in response to calls from investor advocates, including the Canadian Foundation for Advancement of Investor Rights and the OSC’s Investor Advisory Panel, to look at whether advisors should be required to act in their clients’ best interests (a more stringent standard than the suitability standard that currently applies).
OSC director communications & public affairs, Wendy Dey, indicates that OSC staff are working on a paper examining the fiduciary duty issue, but says that “details around this initiative are still to be worked out”, and the timing of the paper’s publication has yet to be confirmed.
The branch report notes that the OSC has been monitoring the fiduciary standard debate in Canada and internationally, and recent rule developments in the United States, Australia and the UK related to fiduciary duty.
“Recently, there have been important international developments on the issue of fiduciary duty,” it says, noting that the U.S. Securities and Exchange Commission is expected to introduce rules in 2012 that would create a common statutory fiduciary duty for investment advisors and broker-dealers when they are providing personalized advice to retail clients. In Australia, the government is also expected to introduce legislation in 2012 that will make advisors subject to a fiduciary duty when dealing with retail clients.
IE