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Originally published: April 21, 2016
This article is part of the Investor Office series of discussions with key figures in Canada’s financial services industry whose work impacts investors. The views expressed in this article are entirely those of Neil Gross and are not intended to represent the views of the Investor Office or the Ontario Securities CommissionOntario Securities Commission An independent Crown corporation that is responsible for regulating the capital markets in Ontario. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in capital markets, and to contribute to the stability of the financial system and the reduction of systemic…+ read full definition.
Meet Neil Gross, Executive Director of the Canadian Foundation for Advancement of Investor Rights (FAIR Canada). FAIR Canada’s mission is to be a national voice for investors in securities regulation and a catalyst for enhancing the rights of Canadian shareholders. FAIR Canada provides the public, governments and regulators with research and information about investor rights and protections in Canada’s capital marketsCapital markets Where people buy and sell investments.+ read full definition. Neil recently spoke to the Investor Office about FAIR Canada’s work.
Before joining FAIR Canada, I spent 30 years as a lawyer specializing in investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition malpractice claims. I began working solely on the side of plaintiff investors, but over time about half my cases involved defence work and enforcement proceedings before Canadian securities regulators and self-regulatory organizations.
I think the varied experience I’ve had in my career has given me a balanced perspective, and that perspective fits well with FAIR Canada’s mission to be both a strong and thoughtful voice on investor protection issues.
On FAIR Canada’s role…
Before FAIR Canada came into existence eight years ago, there was a gap in the way Canadian securities regulators made their policy decisions. They received plenty of input from the investment industry, but very little from ordinary investors.
Lots of people could see that a skilled consumer-focused organization was needed to articulate those investors’ concerns and to make sure their interests got taken into accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition in the regulatory process. It was important to give a voice to those who couldn’t speak for themselves. And it was also important to help securities commissionsCommissions What you pay to a broker or agent for their services. Often called a “sales commission”. For example, you pay a fee to someone who buys or sell stocks or real estate for you.+ read full definition, SROs and governments make the decisions they need to make in order to fulfill their investor protection mandates.
FAIR Canada was created to be that missing consumer voice. We’re independent and proactive, and we strive at all times to be a sophisticated, objective and balanced voice. That means we always say what we think in a very frank way, but without grievance or acrimony.
On the work that FAIR Canada does…
FAIR Canada is pretty unique. We’re the only investor-focused organization in Canada operating full-time with a permanent staff of securities lawyers. This gives us the ability to analyze public policy and propose regulatory initiatives across a full spectrum of investor protection issues, including their legal dimensions.
Those capabilities also make us a counterweight to the financial industry’s perspective on public policy questions. At the same time, our independence allows us to be an unconstrained commentator on the regulatory system’s investor protection efforts.
Altogether, we feel this results in a better informed, more robust and more balanced policy-making process – and we think that produces much better outcomes for all stakeholders.
On regulatory priorities…
The big issues at play right now are the elimination of compensation methods that create conflicts of interest, the need to elevate the proficiency and professionalism of financial advisors, and the need for effective redress for harmed investors. These issues all involve a fundamental organizing principle: that those who provide investment advice must do so based on what’s best for their clients, not for themselves.
We believe this basic organizing principle should be the lens through which all other issues are viewed, so that regulators’ responses to the issues can be crafted in a systematic way and can work in a coherent fashion. As a result, we think regulators’ priorities should reflect commitment to a “best interests” standard, and this commitment shouldn’t waver in response to calls for more expedient policies.
On FAIR Canada’s funding…
Much of FAIR Canada’s funding has come from regulators, but we also receive financial support from individuals, foundations, government grants, class action settlements and corporate donors.
We’re pleased that two of Canada’s largest financial services companies have shown leadership in recognizing the value that FAIR Canada brings to the policy-making process. And by accepting a strict condition that their donations can’t have strings attached, these companies are also demonstrating support for making the policy process more balanced and better for everyone.
On engaging with investors…
Financial advisors and their firms have to be held to the highest professional standards, but at the same time we also encourage investors to become engaged on the issues that affect them.
It’s especially important that Canadian investors understand the risks associated with investment products and strategies, the cost of the products they buy, and the cost of the advice they receive, as well as their rights as shareholders in our increasingly complex capital markets.
We encourage Canadians to make use of the information and resources that FAIR Canada posts online (www.faircanada.ca) and that we distribute through our free newsletter, social media and our public conferences. We also encourage investors to shareShare A piece of ownership in a company. A share does not give you direct control over the company’s daily operations. But it does let you get a share of profits if the company pays dividends.+ read full definition their comments, concerns and experiences with us.