In response to a hot off the press Investment Executive news article, Regulators must enforce OBSI recommendations: IAP, I want to provide the following comments:
As the OBSI reports state, their recommendations consider issues of fairness as opposed to only the rules which may result in a different conclusion.
While OBSI considers the rules and standards developed by other bodies, including regulatory bodies like the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA), the focus for OBSI is on what is fair between the parties in the particular circumstances. Therefore, OBSI’s conclusions will not necessarily be the same as conclusions drawn by another body bound by specific rules or subject to a different standard.
Until we have standards of conduct that relate to fairness it is unlikely that regulators will be able to easily enforce the ombudsman’s decisions. There is a conflict and our regulators are wont to stay within the rules.
Fairness has an ethical dimension similar to that of a best interests standard. I am sure we can all appreciate the intellectual quagmire that this would place regulators in when they cannot even decide which side of the best interests fence they wish to stand.