The Canadian Securities Administrators (CSA) released a consultation paper that examines the current standard of advisor conduct across Canada and asks if they should be responsible for more than ensuring basic suitability.
“The 2008 global financial crisis has generated significant debate on the standard of conduct advisers and dealers owe to their clients when providing advice,” CSA’s paper says. “The principal question is whether advisers and dealers should have an obligation to act in the best interests of their clients when providing advice to them.”
Read: Clients speak up
It poses the following questions:
- What are the current obligations of an adviser/dealer when providing advice to a client?
- Do investors and advisers/dealers understand the nature of their relationship?
- Do investors believe (and expect) that their advisers and dealers act in their best interests?
- Would a best interest standard affect the different compensation structures of advisers and dealers?
- What problems would be solved by the introduction of a statutory best interest standard for advisers and dealers?
- If a best interest standard were imposed, in what circumstances should it apply?
CSA’s paper stresses the fiduciary duty debate in Canada is an important one, as it’s revealed the need to enhance investor protection when it comes to the advice they’re offered about markets and investments.
But the CSA also reminds advisors “no decision has been made whether a statutory best interest standard should be adopted (and on what terms).”
The paper is available now, and comments are due Feb 22, 2013.