Securities regulators’ new proposed package of reforms promises to be a bold effort to improve the treatment of retail investors. Now, the regulators must follow through.

On June 21, the Canadian Securities Administrators (CSA) sided with the investment industry and against investor advocates when the CSA declared that it would not be banning embedded commissions or introducing a regulatory “best interest” standard. Yet, at the same time, the CSA won investor advocates’ support for proposing a set of substitute reforms that would incorporate best interest requirements into various aspects of existing rules.

If adopted, the proposed “client-focused reforms” effectively will require the industry to prioritize clients’ best interests when assessing suitability and confronting conflicts of interest. The reforms also will require the industry to pay greater attention to the impacts of cost and compensation on clients. Furthermore, the CSA promises to introduce measures in the autumn that will ban deferred sales charges and outlaw the payment of trailer fees to discount brokerages.

At this point, though, the salve to investors remains purely hypothetical. The only concrete action that the CSA has taken so far is to back down on two major investor-friendly policy proposals.

Whether the client-focused reforms will ever be enacted remains to be seen. They could be allowed to wither and die in the slow- moving machinery of regulatory policy-making. Or they could become so delayed and watered down that they are rendered irrelevant. Allowing either to happen would be a shameful betrayal of regulators’ duty to protect investors and to foster fair and efficient capital markets.

The client-focused reforms must not prove to be simply an empty promise designed to cover up the regulators’ latest capitulation.