Standard Life concerned about over-regulation of CAPs

(October 14, 2003) Standard Life has released its response to the Joint Forum of Financial Industry Regulators’ proposals regarding employer-sponsored pension plans and Group RRSPs.

While welcoming the initiative as a means to “develop a foundation for the effective regulation of capital accumulation plans (CAP),” the firm has expressed concern that the current proposal will do little to make things clearer for investors in such plans.

“There is no harmonization across Canadian jurisdictions, nor is there any coordination within the insurance, pension and securities sectors,” said Claude Garcia, president of Standard Life’s Canadian operations. “The consequences will be over-regulation, confusion and even conflicting regulations for everyone involved.”

To counter the possible conflicts between regulations, the firm is asking the Joint Forum to ensure regulatory requirements for the different regimes are “sufficiently similar that compliance with any one of them is adequate.”

Another problem the company sees in the proposal is what it considers excessive disclosure, saying that detailed transaction records should be available to CAP participants by request, rather than as standard reports.

“As the draft text stands, providers would have to enumerate each transaction made within the year,” said Garcia. “This means that a member who is paid 26 times a year, invests in 5 different funds and has three sources of contributions would end up with a statement with close to 400 lines.”

Standard Life admits its opposition to this requirement is based on cost, but says it agrees with the principle of transparency.

Standard Life manages approximately $6 billion of retirement assets for over 400,000 CAP members across Canada.

What do you think about the proposal for more detailed disclosure? Will it benefit or confuse the CAP participant? How would you like to see the reform efforts end up? Share your thoughts about this topic in the Talvest Town Hall on Advisor.ca.

(10/14/03)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.