IAP Notice: OSC Investor Advisory Panel Comments on OSC Statement of Priorities

OSC Investor Advisory Panel Comments on OSC Statement of Priorities

TORONTO – The OSC Investor Advisory Panel has submitted its comment letter to the Ontario Securities Commission regarding the proposed 2011 - 2012 Statement of Priorities.

The Panel received and considered comments from the public after conducting four retail investor focus groups. It also met with investment industry experts in its efforts to widely consult with a broad range of stakeholders. “We are hopeful that the input that the Panel received from our consultations, especially from retail investors, will be instrumental for the OSC as it finalizes its priorities to ensure that investors in Ontario’s capital markets are adequately protected.” said Anita Anand, Chair of the Investor Advisory Panel.

The seven-member Panel concluded that the draft Statement of Priorities lacks specificity, making it difficult for investors to determine if the stated priorities have been achieved. Further, the Panel made specific recommendations for amendments to the draft Statement of Priorities, including three areas that warrant regulatory action:

1. duties owed by financial service providers to their clients;
2. point of sale disclosure obligations; and
3. power for the Ontario Securities Commission to award restitution to investors.

The Panel’s view is that the existing suitability and know-your-client rules are insufficient to protect investors and that an explicit fiduciary duty is necessary. “Retail investors told us that they placed utmost trust in their advisors and indeed thought these individuals already hold this obligation” said Anita Anand.

The Panel also determined that the “Fund Facts” disclosure is a positive step forward but does not go far enough. The Panel recommends that the OSC add specific risk and benchmark performance measures, and extend the requirement to other savings and investment instruments to ensure that all investors can make an informed decision before they invest. The Panel also requested that the OSC seek the power to award restitution to investors, similar to that currently available in other jurisdictions.

The Investor Advisory Panel was created in 2010 as an independent body to contribute an investor perspective to the OSC’s rule and policy making process. The comment letter and additional information about the Investor Advisory Panel are available on the OSC website at osc.gov.on.ca.

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