Investor issues absent from election campaign

(June 21, 2004) Amid all the federal election campaign hype, there’s been nary a whisper on issues related to the financial services industry, such as investor protection and regulatory reform. That’s an oversight Toronto advisor and author John DeGoey would like to see addressed.

“We have a situation where the two major parties have both spoken sensibly and passionately about the need to be more transparent and focused on the needs of the little guy and to be open about how everything is done,” DeGoey says. “Yet when the opportunity comes to discuss legislative reforms that would do precisely those things, at least with regards to financial services, they are conspicuously silent. I think that’s a travesty.”

The senior financial advisor at Assante says that while the Liberals and Conservatives have talked about integrity, ethics and disclosure, there’s been nothing in the way of concrete action. “The Liberals have been tainted by scandal and need to demonstrate that they are serious when they see they want to do things differently. What we have in the financial services industry is a disclosure deficit. “

DeGoey — author of The Professional Financial Advisor — suspects politicians are reluctant to raise investor protection and regulatory reform issues because of the power the major financial corporations, such as the big banks, insurance firms and mutual fund companies, wield.

“Banks and insurance companies are among the biggest donors to Canada’s political parties,” he notes. “Corporate Canada is greedy in pursuing its agenda and politicians are in fact protecting the interests of major players in the financial services industry.

“Corporations have clout and politicians don’t want to piss them off as they head into an election.”

In Advisor.ca’s online forum, the Talvest Town Hall, one advisor wrote of his concerns that regulatory issues, such as the recommendations of the wise persons’ committee to create a national regulator, have not been raised in the current campaign. “I think we as voters should approach our local candidates regarding these issues that will most likely affect our pocketbooks a lot more than a tax deduction or healthcare spending,” the advisor added.

CARP, Canada’s Association for the Fifty-Plus, and the Small Investor Protection Association (SIPA) recently teamed up to produce a report calling for political action to protect investors. The report has been temporarily shelved by CARP’s board, due to concerns that it would be lost among the election campaign noise.

“At the moment there seems to be very little political or media interest in anything other than the election itself,” says CARP’s Judy Cutler. SIPA’s Ken Kivenko expects the report to be publicly released in September.

A summary of the CARP/SIPA report obtained by Advisor.ca indicates the two groups will call for the creation of an independent national investor protection agency, which would work with regulators to monitor complaints and resolve disputes.

DeGoey questions the decision to delay the report’s release. “I pushed them to do this sooner rather than later — in my view they are wrong. They think they can make a bigger splash in September than in June, but if it were me, I would have done it sooner.”

Still, not everyone believes Canada’s politicians should be talking more about investor issues. Patricia Cosgrove — a self-described abused investor who battled regulators for years in a case involving her elderly mother — says investor protection can’t be an election issue because it concerns only a small segment of the population. “Healthcare, housing and the economy are far more important,” she says.

Advisor Eric Willerth, writing in the Talvest Town Hall, agrees, adding education, same-sex marriage, national security and jobs to the list of issues he believes are more pressing that investor protection. Willerth says while he agrees that the investor issues probably should get more attention, the general population is not interested.

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DeGoey argues that while investor protection is likely not as critical as issues like healthcare, it’s still important. “Healthcare is a larger issue, but they shouldn’t be allowed to talk about those kind of issues to the complete exclusion of financial services transparency.”

With the vote just one week away, DeGoey believes there’s virtually no chance of making investor protection an election issue, at least not this time around. However, there’s speculation that the election will result in a minority government, and that could mean a second vote, perhaps as soon as the end of 2004. “If in fact there is a second campaign, we’ll be able to hit them hard with the need to do this. The issues will only become more pervasive and it will be on the radar screen next time.”

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What do you think? Should investor protection and regulatory reform be election issues? Join a conversation already underway in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/21/04)

Doug Watt