• Aligns with conduct expectations of key international and domestic standard setters. International bodies such as the International Organization of Securities Commissions (IOSCO), the Group of Twenty (G20) and the Organisation for Economic Co-operation and Development (OECD) are clear that, in the wake of the financial crisis, financial intermediaries, such as advisers and dealers, should act in their clients' best interest. International and domestic standard setters have also identified the over-arching obligation to act in the client's best interest, or to place the client's interest first, as a key component of the conduct expectation for their members.
The BCSC has considered the feedback from the Original Consultation Paper about the appropriateness of introducing a statutory best interest duty. Together with the ASC, we have also supplemented that information by conducting our own research and consulting with other experts. Further consultation on a best interest standard is not warranted given the extensive consultation already undertaken by the CSA and the work that has been done since then to identify the investor protection issues and craft targeted responses to them.
Under the proposed Shareholder Rights Directive institutional investors should also annually disclose to the public their investment strategies and explain how such strategies are aligned with the duration of their liabilities and with the medium to long term performance of their assets. Additionally, the proposed Directive imposes disclosure obligations on asset managers, who must disclose on a half-yearly basis to their institutional clients how their investment strategies and policies intend to meet their clients’ investment objectives and duration of liabilities, and on proxy voting advisors.
How do you come up with a thesis statement? A thesis is the result of a lengthy thinking process and careful deliberation after preliminary research. Formulating a thesis is not the first thing you do after reading a writing assignment. Before you develop an argument on any topic, you have to collect and organize evidence, look for possible relationships between known facts (such as surprising contrasts or similarities), and think about the significance of these relationships. Once you do this thinking, you will probably have a “working thesis,” a basic main idea, an argument that you think you can support with evidence but that may need adjustment along the way. Your topic may change somewhat as you write, so you may need to revise your thesis statement to reflect exactly what you have discussed in the paper.
Do you think that inserting anecdotal evidence, for example, high profilestories of people who have had multiple births, as in the case above, willhelp your reader understand your paper?
• the firm's and representative's approach in ascertaining their clients' financial objectives should include an opportunity for clients to express their financial objectives in their own terms. Clients' financial objectives, especially for retail clients, are often goal-oriented and outcomes-based objectives, such as saving for retirement to maintain a certain lifestyle, increasing wealth by a certain percentage in a specific number of years, investing for purchasing a home, or investing for post-secondary education of the investor's children. We expect registrants to have a meaningful understanding of what their client's actual investment needs and objectives are, and it is not sufficient to simply ask the client if their investment needs and objectives fall into one of a short list of pre-determined product-focused options, such as "growth", "income" or "balanced", or limiting the KYC process to a mechanical attribution of clients into such limited options;
• the KYC form should include plain language explanations of what each entry relates to and what each term means, including financial objectives, risk profile (and related terms), types of assets and liabilities;
Firms and representatives act as gatekeepers of the integrity of the capital markets. As part of this gatekeeper role, they are required to establish the identity of, and conduct due diligence on, their clients under the KYC obligation. KYC information forms the basis for determining whether trades in securities are suitable for investors and, more broadly, help the firm and representative understand what the investment needs and objectives of the client are. This helps protect the client, the registrant and the integrity of the capital markets.
The issues addressed in this Consultation Paper are important ones which affect all participants in the Canadian capital markets. Due to the broad impact of these proposed changes, we invite all interested parties to make written submissions. Once we have considered feedback received, we will propose the appropriate rule changes, as necessary. Any rule proposal will be published for comment in accordance with the regular rule-making process.
In August 2015, UK HM Treasury and the FCA launched the Financial Advice Market Review (FAMR) in order to explore the supply and demand sides of the market for financial advice, with the objective of examining whether there is an advice gap, centred on the supply of financial advice, the cost of advice and the revenue from providing it, and the barriers to firms providing advice, including regulatory costs and liability. The paper indicated a possible reduction in access to advice for less affluent investors. UK HM Treasury published a final report on March 14, 2016 setting out the findings of the FAMR together with a number of recommendations intended to address the barriers to accessing advice, including recommendations to allow for the development by firms of more streamlined services such as mass-market automated advice models.
The proposals for regulatory action outlined in this Consultation Paper include new requirements and guidance in a number of areas aimed at enhancing the obligations of registrants toward their clients, including the proposed targeted reforms that create new requirements in various areas, such as:
Only if the Jurisdictions with Concerns about a BIS determine that, together, the CRM2, Point of Sale and proposed targeted reforms are not effective, should we then revisit the question of imposing a best interest standard and how that standard should be defined.
Both industry and regulators have made significant effort to implement the CSA's CRM2 and Point of Sale reforms. Before proceeding with consideration of a best interest standard, the Jurisdictions with Concerns about a BIS believe that we should determine whether those reforms are effective. These changes are intended to advance clients' understanding of how their portfolio is performing and what they are paying their registrants. No other regulatory regime has imposed these significant types of reforms.