A national securities regulator would not necessarily lead to an improved regulatory environment for financial advisors, and could even result in a more cumbersome environment, according to securities lawyer Rebecca Cowdery of Borden Ladner Gervais LLP.

Speaking at the Independent Financial Brokers fall summit in Toronto on Tuesday, Cowdery said she was doubtful that all of the provinces would ever sign on to a national regulatory regime. In particular, she said Quebec would not likely forfeit its control over securities regulation.

“We’re likely always going to have a Quebec securities commission,” said Cowdery, who spent nine years as a senior investment funds regulator with the Ontario Securities Commission before joining BLG.

If a national regulator is formed, she expects it to operate in coordination with a securities commission in Quebec, and possibly with a separate commission in Western Canada as well.

As a result, Cowdery said the national securities commission would simply add another layer of regulation to the industry, and would not improve the current structure.

“I don’t hold out much hope of it being any better than it is today. In fact, there is a concern that it might be even worse than it is today,” she said. “What you’ll have is one more layer on top of regional securities commissions.”

Cowdery admitted that a national regulator would provide some benefits in terms of streamlining, improved harmonization, and bringing Canada up to par with other countries around the world. But she said advisors would not feel the advantages.

“I’m quite skeptical on whether there would be any real improvement, from a day-to-day basis, on the ground, for people working in the industry,” she said.

If a national regulator is formed, Cowdery urges the government to establish it in Toronto, rather than Ottawa. That way, she said, the national commission staff would be more tuned into the financial services industry.

Cowdery said she was encouraged by the new national instrument on registration, since it brings harmonization to an aspect of the industry that has historically lacked unity between provinces. She noted that the new rule, National Instrument 31-103, marks a major step forward for the industry, since it incorporates a variety of issues that have been up for consideration since the mid-1990s.

“Everything that we’ve been talking about as an industry with the regulators…has actually culminated with 31-103,” she said. “It does affect every aspect of your business when you’re dealing with securities.”

But she warned that National Instrument 31-103, along with new rules being introduced by the Mutual Fund Dealers Association, could demand hefty changes to the day-to-day processes for advisors and their firms, including much more detailed record keeping.

“It’s going to be a huge challenge, I think, to implement that.”

She said many firms will be forced to enhance their compliance systems to adapt to the new regulations: “They will be expected to bring their compliance systems up to speed.”

IE