Canadians want rules in place to prevent financial exploitation

By The IJ Staff | June 21 2019 03:30PM

An overwhelming majority of Canadian investors believe that protective measures should be put in place to ensure that investment firms and advisors can take action when they suspect investors have become vulnerable or that others might be attempting to financially exploit them.

In a survey released Friday by the Investment Industry Regulatory Organization of Canada (IIROC), 92% agreed it is necessary to have such regulatory tools in place to allow advisors and firms to protect vulnerable investors.

Some 93% support having a “trusted contact” listed on their account – someone the firm or advisor can contact if they believe an investor has become vulnerable or may be subject to attempted financial exploitation.

“Safe harbour” would provide firms with protection

As well, 86% support creating a regulatory “safe-harbour” that will provide investment advisors and firms with protection from possible regulatory sanctions if they take action to protect a potentially vulnerable investor. The example IIROC cites is temporarily refusing instructions that are not in the investor's best interest while investigating the situation and/or reaching out to a trusted contact.

“It is encouraging to see resounding support from Canadians for measures to safeguard vulnerable investors – particularly seniors – and protect them from financial exploitation," said IIROC president and CEO Andrew Kriegler.  “This input from investors complements the comments we have heard from the investment industry on the need for tools like a regulatory safe-harbour to address the issues associated with Canada’s aging population and vulnerable investors.”

Investors surveyed also underlined the need for clarity and transparency in the development of any regulatory proposal, with nine out of 10 agreeing on the need to establish clearly defined circumstances when advisors and firms are able to take protective action.

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