The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) has published an open letter on Tuesday calling on securities regulators to address concerns about the sales practices of bank employees.

The investor advocacy group’s letter, which it recently sent to the Canadian Securities Administrators (CSA), acknowledges that many of the issues that have been raised about the banks fall outside the jurisdiction of securities regulators, but stresses that some of these issues do involve registered representatives.

“Securities regulators need to act to protect investors against performance targets, non-neutral grids, scorecards, sales targets and other compensation-related practices, which lead to consumers being placed in mutual funds or structured products that are not suitable for them, do not meet their needs or are sold without consumers being adequately informed about the risks and benefits (including costs, and charges embedded in the product),” FAIR Canada’s letter states.

The group is also calling on securities regulators to step up their oversight and ensure that bank-based advisors are meeting their regulatory obligations. If they’re not, regulators should ensure “that appropriate disciplinary and enforcement action is being taken.”

In addition, FAIR Canada reiterates its demands for further regulatory reforms, such as the introduction of a statutory best interest standard for advisors, measures to enhance advisor proficiency and to restrict the use of business titles. The letter also says regulators need to take action to address compensation-related conflicts.

“What Canadians need is strong regulatory action taken against practices that don’t meet current regulatory requirements,” FAIR Canada’s letter states. “Moreover, securities regulators need to make it clear what practices and incentives are permissible and those that are not, in accordance with their mandate to protect investors. It should not be left up to the firms to determine whether they will be able to continue to use them. These conflicts are an obvious root cause of poor outcomes for the investing public.”

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