There’s no question that registration reform is an admirable achievement, but it also represents a missed opportunity: regulators should be doing more to both protect investors and reduce the regulatory burden.

The Canadian Securities Administrators are duly proud of the fact that they have managed to modernize and rationalize the long list of registration categories that exist across the country, that they are imposing obligations on a broader swath of industry players and bringing in requirements that aim to cultivate a culture of compliance at all firms.

What is not known is how well the new scheme works.

In the past, the regulators have failed to effectively police the firms over which they have direct oversight. The Mutual Fund Dealers Association of Canada was not created by the dealers but was imposed on them by the regulators, which recognized that they just didn’t have the resources to supervise the long list of dealers properly.

Will the regulators do any better with this new crop of registrants? And, if not, will firms build the culture of compliance that regulators want if the regulators aren’t checking up on them?

Moreover, despite the promises of the reform, it does not deliver complete harmonization: exempt market dealers will enjoy exemptions in several provinces and territories. Nor does it give firms and advisors free rein to deal with clients in different provinces (there’s a limited mobility exemption). And, it remains to be seen how well the passport system will work for multi-province registrations.

From the point of view of investors, there’s much to like about the initiative. But the most significant changes for many of them will come from the self-regulatory organizations, including the SROs’ efforts to implement new client relationship models and new complaint-handling rules, which have yet to be finalized.

Also, it must not be forgotten that this reform has its roots in a more ambitious project to rethink regulation of the retail investment industry, which was to be based on first principles. That original goal has been largely abandoned to turn this ambitious, local undertaking into an incremental, national upgrade.

The CSA’s registration reform is a step in the right direction. But it’s not the giant leap that the financial services industry, and investors, truly need.