“Speed kills” may have made an effective traffic safety slogan back in the ’70s, but the opposite is true in the financial markets where, it’s sloth that’s often fatal. Yet regulators and their political masters continue to ride the brake, stalling market innovation.

The Canadian regulatory system is almost comically archaic. The authorities charged with producing “fair and efficient” markets are a highly fragmented group of regulators, overseen by a mishmash of different, and ever-changing, provincial ministries. The result is a system that’s slow in discharging its routine functions and in developing policy to accommodate market evolution.

Although efforts have been made to improve efficiency — downloading responsibilities onto self-regulatory organizations, and working to harmonize rules — they don’t address the fundamental impediments to timely and efficient oversight, which is the multiplicity of authorities and their lack of genuine accountability.

SROs are quick to make new rules or amend old ones to facilitate market innovation, but they then often languish for months, if not years, as the commissions over mull them. When the commissions themselves recognize an issue that needs addressing, they can take even longer to reach a consensus.

This apparent policy paralysis often leads to one of two unwelcome results: either it stifles innovation and impedes efficiency, or it allows questionable practices and dodgy products to flourish unchecked — sometimes, it does both.

Take the issue of personal incorporation, which regulators have been contemplating for the better part of a decade while allowing mutual fund reps, but not brokers, to incorporate. Either it’s problematic and no one should be allowed to do it, or it’s not, and everyone should be. Regulators seemingly can’t decide.

To be fair, sluggish regulators are purely products of a dysfunctional system. They are nominally accountable only to their own provincial governments and most of those governments appear intent on preserving this needlessly complex system, under the guise of harmonizing, with the development of the passport system. But the reality is that harmonization is never truly effective.

As long as the current provincial structure persists, the Canadian regulatory system remains, inherently, neither fair, nor efficient.