Regulatory fragmentation could get worse before it gets better, Joe Oliver warned Monday.

The president and CEO of the Investment Dealers Association of Canada said that the divergence among regulators appears to be growing at a time when there would seem to be an appetite for genuine improvement and when there are several harmonization alternatives on the table (including the Wise Persons’ national regulator proposal, the provinces’ passport idea, and the Canadian Securities Administrators’ efforts to create a Uniform Securities Law).

“It seems as though every step bringing provincial and territorial rules more closely into harmony is matched by another pulling them further apart,” Oliver told delegates to the IDA’s annual conference.

“So in spite of meaningful progress, no one can confidently predict what we have been advocating for some time – decisive action to bring our regulatory system to where it can and should be. To the contrary, we have to guard against the very real risk of going backwards, by creating unique approaches or introducing important new policies locally.”

The IDA has studiously avoided supporting any particular reform idea, calling instead simply for meaningful, lasting change. It proposes to do its part in rationalizing the regulatory landscape by contemplating a merger of the various self-regulatory organizations (see earlier story).

Oliver continued to sound the IDA’s plea for more powers. He noted that it is disappointed that neither the USL, nor British Columbia’s new draft securities act, give the IDA the powers it’s seeking. Among other things, the IDA wants the power for SROs to compel witnesses and documents for investigative purposes and to enforce regulatory decisions by treating them as court orders.

“The IDA’s disciplinary process loses credibility when it imposes well-publicized and substantial monetary penalties but has no effective means to enforce the penalties,” he said. “We do what we can with the powers we have — we will not register individuals to work at member firms if they have not paid their fines — but that does not overcome justifiable skepticism about the process.”

“It is not that anyone has raised any objections in principle to these requests,” Oliver lamented. “The CSA just won’t support them, even though the commissions quite properly hold us to account for our enforcement performance. So we have asked the provincial ministers to include these powers in the Uniform Legislative Act in each province.”