Association says industry will struggle to deal with regulatory burden unless changes are made
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The industry will continue to be weighed down by the burden of regulation unless the OSC modernizes its technology, according to the Portfolio Management Association of Canada (PMAC).
While applauding the regulator’s efforts to reduce registrant-specific regulatory burden, the PMAC has made a number of recommendations and believes portfolio managers should be regulated differently. It wants the burden to be proportional across industry segments and wants to ensure investors have continued access to services and to enable PMs to provide a diverse universe of securities and investment strategies.
In its feedback to the OSC, the PMAC said: “Clients of PMs have chosen to have their assets managed on a discretionary basis and this decision merits proportional regulation that has been designed to meet client’s needs.”
It added: “PMAC thinks all stakeholders, including the OSC, would benefit from material investments in technology to streamline data gathering, sharing, and analysis. Recognizing the material time and costs involved, we feel it is critical for long-term success to modernize your information technology and systems.
“Without a major investment in tech, we believe OSC staff and registrants will continue to struggle with burden, unnecessary cost and time lost dealing with archaic, disjointed systems. Feedback from all stakeholders on the features and functionality of the technology will be critical.”
The PMAC also called for a “reimagining” of the OSC’s processes, workflow and collaboration internally and with the CSA, and urged the regulator to rework the outside business activity (OBA) reporting requirements, including the trigger for what constitutes a reportable OBA.
The PMC believes the risk assessment questionnaire can be improved through technology and continues to have issues with the proposed client-focused reforms (CFRs).
It insisted that, as it stands, the proposal “causes very serious concerns for PMs as many of them are not appropriate, or optimized, for PMs’ investors”.
It added: “PMAC is particularly concerned that the costs of compliance with the CFRs will more acutely impact the ability of smaller and mid-sized firms to service investors. We urge the OSC and CSA to tailor the CFRs applicable to PMs to ensure the compliance burden is commensurate with the benefits that stakeholders will experience as a result.”
Instead, it urges a reiteration and clarification of the fiduciary duty owed by PMs for a “more responsive, effective regulation of this registrant category”.
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