Lack of payment from financial advisors and firms deemed a “national disgrace” in Canada
They say you shouldn’t judge a book by its cover – but you can certainly judge a report by its title. That’s why plenty of jaws would have dropped when readers picked up the latest Small Investor Protection Association (SIPA) Report for Canada, simply entitled: “Unpaid fines: a national disgrace”.
The emotive language is there for all to see from the opening words of the report by Debra McFadden, which goes on to suggest that there is more than $899,216,448 owed to Canadian regulators. Where does the author get this figure from? Here are the statistics that the author claims to have uncovered, taken directly from the report:
Mutual Fund Dealer Association (MFDA) = $56,793,709.71* (includes costs imposed)
Investment Industry Regulatory Organization of Canada (IIROC)*= $27,941,793.00
Ontario Securities Commission (OSC) = $307,148,437.00
British Columbia Securities Commission (BCSC) = $340,000,000 (as of March 31, 2015)
Alberta Securities Commission (ASC) = $105,000,000 (as of March 31, 2015)
Nova Scotia Securities Commission (NSSC) = $1,655,940
New Brunswick Financial and Consumer Services Commission Unpaid Fines = $5,134,950 (from 2005-2015)
Quebec Autorité des marchés financiers total outstanding = $55,088,573.68
Manitoba Securities Commission = $453,044.93
Total thus far = $899,216,448.32
The report even suggests that this figure is a relatively conservative estimate: because in most cases it doesn’t account for those who only partially pay their fine, nor does it include the costs imposed.
The figure is described by the author as “jaw dropping” as she points out that she is “personally appalled by this figure and the low rate of collection throughout Canada.” She goes on to state that people need to be held accountable for their wrongdoing and only when they believe the cost of engaging in misconduct is greater than the reward will they be dissuaded from engaging in it. She suggests that by allowing unpaid fines this misbehaviour is effectively being quietly tolerated.
So what can be done?
The author calls for pressures to be placed on the government to make securities regulators more accountable to Canadians.
The report states: “Since regulators set the terms for dealer membership, why not, by contract, require a guarantee from each and every dealer for the regulatory, financial findings against all of its present and former employees, contractors, agents, directing minds, etc.? If that was put in place, a great deal of wrongdoing would cease quite quickly.”
It calls for sanctions with wider aims and concludes that the “Canadian investment industry and its regulators are not worthy of the trust investors have placed in it. This must change.”
If you want to read the report in full, follow this link. Please leave a comment below with your thoughts on its findings – do you agree with its sentiment that the Canadian investment industry is not worthy of trust?
The emotive language is there for all to see from the opening words of the report by Debra McFadden, which goes on to suggest that there is more than $899,216,448 owed to Canadian regulators. Where does the author get this figure from? Here are the statistics that the author claims to have uncovered, taken directly from the report:
Mutual Fund Dealer Association (MFDA) = $56,793,709.71* (includes costs imposed)
Investment Industry Regulatory Organization of Canada (IIROC)*= $27,941,793.00
Ontario Securities Commission (OSC) = $307,148,437.00
British Columbia Securities Commission (BCSC) = $340,000,000 (as of March 31, 2015)
Alberta Securities Commission (ASC) = $105,000,000 (as of March 31, 2015)
Nova Scotia Securities Commission (NSSC) = $1,655,940
New Brunswick Financial and Consumer Services Commission Unpaid Fines = $5,134,950 (from 2005-2015)
Quebec Autorité des marchés financiers total outstanding = $55,088,573.68
Manitoba Securities Commission = $453,044.93
Total thus far = $899,216,448.32
The report even suggests that this figure is a relatively conservative estimate: because in most cases it doesn’t account for those who only partially pay their fine, nor does it include the costs imposed.
The figure is described by the author as “jaw dropping” as she points out that she is “personally appalled by this figure and the low rate of collection throughout Canada.” She goes on to state that people need to be held accountable for their wrongdoing and only when they believe the cost of engaging in misconduct is greater than the reward will they be dissuaded from engaging in it. She suggests that by allowing unpaid fines this misbehaviour is effectively being quietly tolerated.
So what can be done?
The author calls for pressures to be placed on the government to make securities regulators more accountable to Canadians.
The report states: “Since regulators set the terms for dealer membership, why not, by contract, require a guarantee from each and every dealer for the regulatory, financial findings against all of its present and former employees, contractors, agents, directing minds, etc.? If that was put in place, a great deal of wrongdoing would cease quite quickly.”
It calls for sanctions with wider aims and concludes that the “Canadian investment industry and its regulators are not worthy of the trust investors have placed in it. This must change.”
If you want to read the report in full, follow this link. Please leave a comment below with your thoughts on its findings – do you agree with its sentiment that the Canadian investment industry is not worthy of trust?
