The OSC says new rules on “best practices” are not likely this fiscal year but if it’s watching the situation in Australia, it may want to slow the pace even further.
The Ontario Securities Commission (OSC) on Friday said that new rules on “best practices” and mutual fund trailing commissions were not likely this fiscal year. If it’s watching the situation in Australia, the Canadian regulator may want to slow the pace further.
This Monday, Australia’s Future of Financial Advice (FOFA) act – a broad bill that sets best practice standards, bans certain commissions and forms of remuneration -- is set to come into force. But advisors and the financial industry, fearing massive disruption, are lobbying hard for a delay.
Brad Fox, chief executive of the Australian Association of Financial Advisers (AFA), told Wealth Professional that regulators have not provided advisors with adequate time or direction. “We’re still waiting on guidance on things like conflicted remuneration, grandfathering and corporate super [government-backed superannuation retirement funds]. This stuff starts on Monday and we don’t have the final guidance yet.”
Canada's OSC is in the process of holding hearings on best practice standards and embedded commissions. It has said it would look to actions in other jurisdictions when deciding on regulation, making the situation in Australia of high relevance.
In its mid-year update on Thursday, the OSC indicated that no new regulation is imminent this fiscal year. "The need for clear understanding of the issues and careful analysis of the potential impacts is critical as the regulatory choices will likely have material impacts. As a result, the OSC does not expect these issues to be fully resolved in 2013-2014."
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Australia's Financial Services Council (FSC), which represents financial corporations, is petitioning the new Australian government to delay implementation, saying that industry underestimated the enormity of FoFA and that there will be widespread non-compliance come Monday.
FSC chief executive John Brogden, speaking at an event, was quoted as saying that “there has been a level of indecent haste towards 1 June this year and there is concern about non-compliance in the industry.”
Brogden said the industry did not want to repeal FoFA, but would like to see a delay of implementation, a move that would be welcomed by advisors.
AFA’s Fox said advisors would likely need at delay until early 2014. “I would think that if it [a delay] was three months, we’d be having the same conversation. It would be improved, but would have the same elements,” Fix said. “I think six months would be the minimum to achieve what we would be seeking by getting a delay.”
FoFA includes provisions on best interests duty, a ban on conflicted remuneration, mandates stricter fee disclosure and requires that advisors have clients “opt-in” when products are renewed.
