The last business day of 2006 brought the new Consolidated Ontario Securities Act, Regulations and Rules, complete with policy statements, blanket orders and notices — a staggering 2,955 pages.

Looking at this weighty tome, I thought it no wonder that those working in the financial services industry find regulation overwhelming. Some question whether they want to remain in the industry; others question the feasibility of remaining independent or a niche player, with limitations on the investment options they can recommend to clients.

Although a certain amount of industry rationalization is generally desirable, too much can be harmful to the industry and the people to whom it provides services. If the independents disappear, the resulting oligopoly will deprive investors of meaningful choice and further limit the little bargaining power they now possess.

What can be done to improve the lot of investors and sustain a competitive industry? These twin objectives are not incompatible, but the means to achieve them require a longer-term focus than the industry usually has. And also require a commitment to the principle that what is good for inves-tors is good for the industry.

One of the Canadian industry’s greatest impediments to long-term viability is the unconscionably high fee structure. The little understood, capital-eroding impact of these costs on investors pits the interests of investors and of financial services providers against each other. As investors begin to appreciate this impact, their awareness is increasingly undermining their confidence and trust in the integrity of those upon whom they rely for financial advice and planning.

Another impediment to long-term viability is the industry’s attempt to maintain a distinction between financial advice and financial planning — terms that the investing public views as having the same meaning and that many in the industry use interchangeably.

This confusion was brought home by the recent experience of a widow who, after the death of her husband, met with his financial advisors to seek advice about her situation. They said they could provide her with full financial planning and investment advisory services. In reality, all they wanted was to persuade her to commit her sizable inheritance to high-cost managed funds. She was on her own to obtain answers to pretty basic financial planning questions, despite the impact that the answers would have on what she had to invest.

Promising more than what is actually being delivered is an unfair business practice and would not be tolerated in any other consumer transaction.

Yet another impediment to the industry’s long-term viability is the financial abuse to which some in the industry subject their clients. A recent article in the Toronto Star highlighted situations of account churning, age-inappropriate investments, investments that are not understood and RRIF accounts whose only investments are mutual funds that are subject to a deferred sales charge that will have to be paid when amounts are withdrawn from the accounts.

These situations all raise questions: where are the people at the financial institutions and dealers who review the suitability of investments? How do these abusive situations get by them? Is no one reviewing these matters?

This brings me to the subject of industry education and training. A lot of this has been outsourced by self-regulatory organizations, but how active are they in overseeing the robustness of the substance of what is being taught? How well do these courses equip financial services representatives to understand basic concepts encompassed, for example, by the “know your client” and suitability obligations and the role that these obligations play in investor protection?

If financial services representatives do not have a firm grasp on the importance of understanding these concepts, it’s no wonder that reps view these obligations as simply more rules-based technical requirements and shrug them off as a regulatory burden rather than as integral tools in meeting client needs.

These are but examples of attitudinal changes needed before the burden of regulation is likely to change. The well-being of the industry and of investors is at stake. IE