Financial services network seen as alternative to national securities regulator

(November 22, 2002) Canada’s financial services industry should set aside the debate over the creation of a national securities regulator and instead focus on building a complete network, encompassing all industry and regulatory functions, says Mark Daniels, chair of the Financial Services Council of Canada.

A fully-integrated, country-wide network is essential to ensure the long-term viability of the industry, Daniels said yesterday in a Toronto speech. “This would not be a federal or provincial body but rather a national authority with responsibility for prudential and marketplace relations.”

Daniels’ proposed network would cover all institutions in the financial services industry, including banks, insurers, investment dealers, mutual funds and credit unions. It would also cover consumer protection, dispute resolution and redress, compliance, licensing, market conduct, discipline, capital adequacy and prudential standards. “Basically all the regulatory functions currently flowing to the Office of the Superintendent of Financial Institutions and the 13 provincial and territorial regulators,” he said.

It’s a daunting task, Daniels admitted, but much of the machinery to begin the project already exists. OSFI functions as a national regulator, he said, and provincial financial regulators are working collectively through the Canadian Securities Administrators, the Canadian Council of Insurance Regulators and the Canadian Association of Pension Supervisory Authorities.

“These organizations are already loosely wired together under the aegis of the Joint Forum of Financial Market Regulators,” Daniels said. “The fact is, the Joint Forum with virtually no political backing and not a whole lot of support from industry, is moving right now to address some of the issues that need simplifying and rationalizing.”

Related News Stories

Wise persons wanted: Committee members key to latest securities initiative New committee should have final say on improving securities regulation, MacKay says Former cabinet minister to head insurance industry watchdog Financial ombudsman service announces board of directors, preps for September launch

Daniels said the immediate task is to find an appropriate political and governance overlay to link the various regulators in a formal way. “Once that is done, I would begin with a series of specific projects aimed at dealing with areas where compliance costs are highest,” he added.

An integrated regulatory system could also lead to the demise of individual industry associations, Daniels suggested. “I can see a day where the Financial Services Council embraces the organizations that currently make it up and becomes the Canadian Financial Services Association.”

The Canadian Life and Health Insurance Association (CLHIA), the Insurance Bureau of Canada, the Investment Funds Institute of Canada, the Canadian Bankers Association and the Investment Dealers Association are all members of the Financial Services Council of Canada. Daniels, who is also president of CLHIA, stressed that his views on regulatory reform are personal and have not been endorsed by the council.

Meanwhile, the Financial Services Council is close to launching its one-window consumer complaint service, Daniels said. The Centre for the Financial Services OmbudsNetwork (CFSON), based in Toronto, is scheduled to begin operations in the next couple of weeks. As well as acting as a referral centre for complaints, CFSON will provide general information about the financial services industry.

Separate dispute resolution services for banking and securities, life and health insurance, and property and casualty insurance, are already up and running, although those services could also be integrated down the road, said Daniels.

---

What do you think of Mark Daniels’ idea of a financial services network instead of a national securities regulator? What makes more sense to you? Share your views by sending a message to the “Free For All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca.

(11/22/02)

Doug Watt