The Ontario Investor Advisory Panel recently submitted a letter to the OSC Chair Howard Wetstone. It discussed a number of things that I agree with: the need for an independent impartial body for dealing with financial services industry complaints and higher responsibility and accountability for “advisors” to their investors.
It also made the following comment:
“Maintaining and building trust between consumers and financial services companies should be a central goal of Canadian regulatory and governmental policy.”
The problem at the moment is that the public, unaware of the true relationship between themselves and their “advisors”, would be better off not trusting, and given the current mendacity, a good dose of distrust that would be generated by aggressively disclosing the true nature of the salesperson/investor relationship would be of benefit.
It would appear that the only way we are going to get change in this country is if the consumer is aware of the true nature of the financial relationship they have with the industry and starts to distrust any communication which attempts to suggest otherwise.
Distrust has never been an issue in Canada, and that is the problem.
As part of this whole trust issue, the IAP like countless many other well meaning bodies are not pushing regulators to properly regulate the current system. In the letter that i am referring to, there is no mention of making the current system fully transparent to investors. It is fine asking for fiduciary responsibility and other higher standards to be introduced, but the clear and present danger is the lack of transparency over the current relationship. It is a regulatory fiduciary responsibility to make sure that the industry is making the actual relationship and the responsibilities of that relationship clear. People do not think that “advisors” have a fiduciary responsibility for no good reason: they think their “advisor” has this responsibility because he or she represents themselves in such a role and everybody from regulators to the press talk of “advisors” reinforcing this perception.