OSC Dialogue 2013 – In order to nudge, you need to know where you are going. But does the OSC?

Where is the imperative for the OSC to clearly define exactly what it is and what it stands for? And, of course, where exactly does the OSC want to nudge investors?

I know the Canadian press will not pick up on these points, but I think it is important that they be brought to the public’s attention. I was listening to a recording of the behavioural discussion at the recent OSC 2013 Dialogue.  What interested me was a rather long question by Rhonda Goldberg, Director Investment Funds at the OSC:


“…from the regulatory perspective we need to first step back and decide what is the outcome, what is the purpose that we want to achieve, what does investor protection and fair and efficient capital markets look like?”

“Then when we are able to articulate what …we want that architecture outcome to be, is it to improve investor savings capacity, is it to improve understanding of certain financial products, is it to improve the way advice is provided to investors?

Once we are able to articulate that purpose and that outcome then I think there is an opportunity to look into some of these insights from behavioural economics, from other types of research to say “how much of that can we put within our regulatory framework? “

We already act as gatekeepers today with respect to what investment products are able to be distributed to the market.  We have already framed some choice for the investor today.

“So the question to me, is then how much of it is rule based, how much of it is thinking about these insights, where does the nudging come in if we know that architecture alone won’t get there, is there another type of path we can take.  So I think there is a step before that where…as from a regulator we really do have to articulate what we see as our outcome our purpose.”

Now I take these questions as part musings on some of the issues that clearly require consideration, and I would not impugn the person who spoke them, for they clearly indicate an interest in the derivation of the role of regulators.  But the comments also suggest that there is a void within the OSC as to what exactly their role is, and this also comes across in the two key recent consultations on best interests and embedded commissions where Canada’s regulators failed to clearly define their thinking on the subjects raised.   Unfortunately this lack of direction impacts practically everything in the retail advisory sphere and emphasises the lack of consumer influence in the regulatory process. 

Where is the imperative for the OSC to clearly define exactly what it is and what it stands for?  And, of course, where exactly does the OSC want to nudge investors?

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