rules-regualtion-comply

The majority of Canadians are not financially literate enough to invest in capital markets, says the Canadian Foundation for Advancement of Investor Rights (FAIR Canada).

“[The] risks and costs [of products] are not readily apparent, and many if not most retail investors struggle to comprehend the choices available to them,” FAIR Canada notes in response to IIROC’s request for comment on its strategic priorities.

The Foundation calls on IIROC to help fix this problem and better protect investors. How? By having advisors follow a best interest standard, and insisting that integrity is “a condition of membership. […] It also will require a re-evaluation of the limits of tolerance for misconduct.”

For instance, FAIR wants IIROC to consider what types of violations can be “dealt with through warnings, fines or suspensions,” and what types require more serious consequences, including being barred from the industry.

Further, it notes IIROC will have to improve some of its own best practices in order to “be in a position to insist on integrity.” It cites CSA’s December 2014 Oversight Review Report. IIROC has lacked in:

  • selecting client accounts with a high concentration in particular issues or industries to review for suitability;
  • identifying advisors who recommend high-risk products for clients; and
  • confirming the accredited investor status for distributions of exempt products outside the corporate finance module.

Read more from the comment letter.

Also read:

How to do product due diligence

Big dip in IIROC fines

Editorial: Fix these 3 systematic problems

Originally published on Advisor.ca

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