IFB voices compensation concerns

By John Powell | February 10, 2010 | Last updated on February 10, 2010
1 min read

Now that conversations have opened up about notice periods for advisors facing MFDA hearings, an industry association remains concerned about the inability of brokers to collect compensation for costs incurred to defend claims.

Susan Allemang, the IFB’s manager of regulatory affairs, told Advisor.ca she’s worried that current self-regulatory organization bylaws still don’t entitle an advisor to compensation if a hearing panel finds in his or her favour. She calls the practice unfair and said that it puts advisors at a distinct disadvantage when dealing with the MFDA.

“By not having that ability, you can suspend somebody’s license in a very trust-based profession,” she said. “If someone is operating under a cloud of uncertainty, it is going to hurt their business. There will be times the MFDA will make a mistake and in that event there should be some mechanism for a hearing panel to award compensation to the advisor.”

Shaun Devlin, the Mutual Fund Dealers Association vice-president of enforcement, disagrees. As he sees it, it is the SRO’s chief responsibility is to protect the public; and granting compensation could affect the way the MFDA pursues cases.

“What you don’t want is a regulator to be afraid to take a proceeding because it might have to pay costs,” he concluded.

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    John Powell