Industry challenged to press for regulatory reform

(April 16, 2003) Canada’s financial services industry must speak out on the issue of regulatory reform or risk being stuck with the status quo, participants attending a Toronto breakfast session were warned today. Following a speech by Investment Dealers Association president Joe Oliver, several prominent insiders urged industry participants to seize the opportunity for change.

“Ottawa won’t act to create a national regulator if the industry itself is not demanding it,” said Jim Peterson, former secretary of state for International Financial Institutions. “You have to stick your necks out.

“I think that should be the message from the financial community to the federal government — don’t let them off the hook,” Peterson added during a lively question-and-answer session.

“We need to mobilize the industry players,” said Mark Daniels, president of the Canadian Life and Health Insurance Association, admitting that he has not seen a “groundswell” of interest on the topic.

In response, Oliver pointed out that business people don’t tend to involve themselves in regulatory policy “until it arrives to bite them.” He also noted that the industry might be reluctant to invest energy in a process that has failed in the past. “The last time this was attempted there was pretty uniform opposition in Quebec,” Oliver said. “Different regulators have different views and there are clearly differences across the country.”

Still, Oliver concurred in his speech that the current climate does represent the best chance in decades to address this issue, pointing to “unprecedented interest” on the part of politicians and the public in the reform of securities legislation, due mostly to weak investor confidence and a lengthy bear market.

Paraphrasing pop artist Andy Warhol, Oliver said it’s time to take advantage of that 15 minutes of fame. “With so many eyes and bright minds focused on reform, we have a unique opportunity to act to make our capital markets better.”

Oliver singled out three separate regulatory initiatives he thinks are promising: the Canadian Securities Administrators’ uniform securities legislation project, a provincial ministerial committee and the federal government’s “wise persons” committee.

The IDA supports the USL project, which Oliver feels would go a long way to eliminating duplication and inconsistence. But he adds the proposal does not spell out how substantive differences between securities commissions can be reconciled. “It is not yet clear whether all commissions across the country will participate.”

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The provincial committee, made up of finance ministers from Alberta, B.C., Quebec and Ontario, has already identified two pressing issues shared by the IDA, Oliver said: the need for a passport system so that registrants can operate across the country and a mutual reliance system. “If they accomplish just those two tasks, they will have substantially improved the system,” he said.

It’s unclear just how the “wise persons” initiative will play out, Oliver said, noting that Ottawa’s entry into the regulatory reform arena has not been welcomed in all parts of the country. “An immediate recommendation for a national commission would fly in the face of opposition from Alberta, B.C. and Quebec.

“Barring a serious crisis, it is hard to envisage the federal government asserting jurisdiction in the face of provincial opposition,” Oliver said. Instead, the federal committee may suggest modifying the current model and encouraging harmonization, he added.

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What initiative will best achieve industry harmonization? Is the fact that there are three committees looking at this issue going to help or hinder the reform process? Share your opinions on this or any other industry-related topic in the “Free for All” forum of the Talvest Town Hall on Advisor.ca.

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

(04/16/03)

Doug Watt