Reaction cautious towards Crawford report

(December 8, 2005) Reaction to the Crawford Panel’s report on adopting a single securities regulator has been tepid, with industry participants taking a wait-and-see approach, rather than endorsing or dismissing it.

“I support Minister Gerry Phillips’ initiative in moving the dialogue forward on this very important subject,” OSC chair David Wilson said late yesterday. “It is essential that we take time to carefully look at the discussion paper and its recommendations. We look forward to hearing the views of various stakeholders and the views of our colleagues in other jurisdictions.”

One of the key elements of the Crawford proposal is that each province is assigned an equal voice in a council of ministers that would oversee the regulator. This could help allay fears that the single regulator would simply be the OSC under a different name.

The BCSC is declining to comment, referring interview requests to the attorney general of that province, who was not immediately available.

“It remains to be seen if enough of the provinces would jump on bandwagon and agree to the proposal as set out,” says Ralf Hensel, senior counsel at IFIC. “We’ve seen a number of these kind of proposals before and they haven’t gone anywhere.”

He says he Crawford Panel’s model downplays the role of Ontario in a single regulatory body, which could make it more palatable to the other provinces.

“We’re in favour of any proposal that increases the efficiencies and reduces the costs of doing business in the securities market,” says Ralf Hensel, senior counsel at IFIC. “It’s an interesting model — it raises some good points — but it’s really up to the provinces at this point. Its more of an overall securities issue.”

At least one advisor says the proposal is good, but that it does not go far enough in protecting the investing public.

“I’m happy as far as it goes. In terms of what it does say, I like it,” says John De Goey, senior advisor, Burgeonvest Securities in Toronto. “There are a whole bunch of things that are not said that could and should be part of the discussion — and now is the time.”

Considering the point to a securities regulator is to protect the public, he says he would have liked to see more built-in investor protection. In particular, De Goey says embedded commissions should be eliminated.

“Harmonizing and rationalizing are all good things, but they don’t go nearly far enough in terms of other things, that are conspicuously necessary that are not being done,” he says. “What in this model gives credence to ‘the investor comes first’? How many clients were consulted?”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com