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Expert Panel Says Ontario Needs Unified Regulator

par Mathieu Carbasse | November 06 2015 02:25PM

An expert panel says that, based on the feedback it has received, Ontario's financial services regulatory regime is not as effective as it could or should be. It is recommending that the functions of several agencies be combined into a single, self-funded authority.

Last year the Ontario government appointed an expert panel to consider the mandates of province's three key financial regulatory organizations, namely the Financial Services Commission of Ontario (FSCO), the Financial Services Tribunal (FST), and the Deposit Insurance Corporation of Ontario (DICO). On November 4, panel members George Cooke, James Daw, and Lawrence Ritchie released their preliminary position paper, in which they suggest that many of the functions currently handled by FSCO and DICO would be better performed by a single, integrated organization.

"We propose that a new Financial Services Regulatory Authority (FSRA) should be established, and it should exercise both prudential and market conduct functions in a coordinated but distinct fashion. We also recommend that FSRA should have a Superintendent of Pensions to oversee the Pension division, in a manner that is interconnected with, but distinct from, the other FSRA functions," reads the paper.

This new organisation would be self-funded and governed by an expert board of directors. The panel members also believe that it should be arm’s-length from government and authorized to make and enforce rules, as limited by the statute.

In particular, the paper says that FSRA’s would be obliged to cooperate with other regulators (including self-regulatory organizations) that oversee the providers, sellers and intermediaries of financial products and coordinate regulatory actions to avoid regulatory overlap.

They envision FSRA operating with a "similar and familiar regulatory framework and approach" when overseeing individuals or entities that sell similar products (this includes mutual and segregated fund dealers, insurance agents and brokers, as well as sales staff within financial institutions such as banks). According to the position paper, FSRA would apply "common and consistently applied standards" to all intermediaries that sell similar products.

In addition to these oversight functions, the panel also recommends that the government consider giving FSRA an expanded mandate that would include the establishment of a fraud compensation fund.

In a press release issued on November 6, Advocis, The Financial Advisors Association of Canada, said that it is pleased that investor protection is a central focus within the preliminary position paper. “The committee has been charged with resolving a number of complex issues facing Ontario’s financial services sector. While lacking in detail, the committee’s interim report provides reason for both consumer and advisor optimism,” says the association.

Advocis adds that the proposed FSRA accommodates its own “simple and elegant proposal for a professional body to oversee the standards and conduct of all financial advisors, inclusive of planners in Ontario.”  

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