Canadian Financial Advisers Oppose New Regulations

Canadian financial advisers are up in arms over a proposed regulation they say will compromise their ability to give independent advice.Members of the Independent Financial Services Brokers of Canada, which represents 1,500 licensed advisers, are objecting to a September proposal requiring them to be monitored by larger fund companies. In November, the organization took its grievances to the Ontario

Canadian financial advisers are up in arms over a proposed regulation they say will compromise their ability to give independent advice.

Members of the Independent Financial Services Brokers of Canada, which represents 1,500 licensed advisers, are objecting to a September proposal requiring them to be monitored by larger fund companies. In November, the organization took its grievances to the Ontario Finance Ministry, Canada's largest regulator.

"We must remain independent and be fully accountable to ourselves and our clients in how we run our businesses," says David Atwood, chairman of the group.

However, Canadian securities regulators seem less than impressed. They have been pushing for closer ties between independent salespeople and the product firms in an effort to improve chronically weak regulation of independent distributors.

Historically, licensed advisers used broker/dealers and fund companies for back office processing, but otherwise operated independently. The rule would require salespeople to be supervised directly by their largest suppliers--something the vendors generally support as a way to develop more sales of their products.

"If this goes through, consumers will be hurt because the advisers will inevitably have to join with a large firm, and they will be more likely to push in-house products rather than choose from the range of offerings they consider best for their clients," Atwood says.

Final action on the rule is expected early this year.

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