February 2 2010 by Ellen Roseman
I’m doing a Sunday series in the Star on investor protection. And I’m asking whether Canadians will ever get stronger laws to save them from unscrupulous sellers of investments.
Choosing my words carefully here, I’m avoiding the word “adviser.” Investor advocates argue that industry participants are licensed to sell specific types of investments or investment services, but not to give advice.
Advice-giving is not regulated in Canada. And while Quebec regulates financial planning, the only province to do so, it couldn’t head off the Earl Jones scandal. (Jones, a Montreal money manager who ran a Ponzi scheme and ended up in jail, stayed aloof from all efforts to control him.)
Check out what the Quebec Institute of Financial Planning says here:
â€œWe want a professional corporation to be created in order to better protect the public â€“ the status quo is no longer satisfactory,â€ said Jocelyne Houle-LeSarge, the executive director of the Quebec Institute of Financial Planning (QIFP), the only organization in Quebec authorized to grant financial planning diplomas, and to establish rules concerning the ongoing professional development of professional financial planners.
Houle-LeSarge, who chaired the Quebec Order of Certified General Accountants in 1999-2000, says a professional corporation of financial planners would have limited the losses suffered by the alleged victims of Jones, even though he described himself as a financial advisor, and not a financial planner.
â€œNow anybody can describe themselves as a financial planner,â€ noted Houle-LeSarge. â€œBut when there is a radar trap on the highway, everybody slows down. The same with a professional corporation. It wouldnâ€™t be long before a professional corporation of financial planners would seek to prosecute individualsâ€ who plied the trade â€œillegally.â€
I agree 100 per cent with Houle-LeSarge’s later comment that the overall regulatory regime is “all over the place” and engenders a lot of confusion.
If you’re concerned about the advice you receive, you don’t know where to go with your complaints. Not only are there too many securities/financial regulators, self-regulatory bodies and ombudsman services in Canada, they tend to have close ties with the industries they govern or from which they derive their funding.
You may not get a serious settlement unless you hire a lawyer, an experienced litigator working with investor plaintiffs. And that means paying serious money up-front in retainer fees.
Do you think a national securities regulator will improve investor protection in Canada? Will the government pay heed to the expert panel on securities regulation, which called for improved complaint-handling and redress mechanisms and giving a stronger voice to investors?
Without a dedicated investor issues group, I doubt that regulation will ever get better. As the panel said:
Securities commissions in Canada provide fewer opportunities for investor advocacy and engagement than other key capital markets jurisdictions.
This is to the detriment of securities regulation in Canada and diminishes public confidence in regulatory accountability, integrity, and efficiency.