BCSC Supports Raising The Standards Of Conduct For Registrants

The British Columbia Securities Commission (BCSC) today announced that it strongly supports taking action to strengthen the client-registrant relationship through a sweeping set of targeted reforms to the obligations that registrants owe to their clients (NI 31-103). Proposed targeted reforms to 31-103 were published for comment today in the CSA’s Consultation Paper 33-404: Proposals to Enhance the Obligations of Advisers, Dealers, and Representatives Toward Their Client (the Consultation Paper).

“All CSA jurisdictions agree that we can do better for investors in their existing client-registrant relationship, and improving investor outcomes is a goal we all share,” said Nigel Cave, Vice-Chair of the BCSC. “Raising the standards of conduct for registrants is clearly in the interests of investors, and we are convinced that the best way to achieve this is to implement the proposed targeted reforms on their own.”

The BCSC believes that the overlay of the proposed best interest standard is not workable in the current regulatory and business environment, and may cause investors to think registrants have an unqualified duty to act in their best interests, not understanding that some conflicts would still be permitted. This may exacerbate one of the investor protection issues identified by the CSA – overreliance by clients on registrants. Implementing only the specific targeted reforms will meaningfully and practically address problems in the client-registrant relationship identified by the CSA, and will provide regulators with the tools necessary to ensure compliance and pursue enforcement action, where necessary.

“We believe the targeted reforms establish clear, practical, and enforceable requirements for registrants to follow and for regulators and courts to enforce, all in a way that will not raise expectations about investor protection that may not be realized,” said Cave. “We have concluded that the proposed targeted reforms, combined with the full realization of the CRM2 and Point of Sale initiatives, will achieve the best outcomes for investors and significantly improve investor protection.”

The Consultation Paper can be found on CSA members’ websites. Comments must be submitted in writing by August 26, 2016.