Are Canadian regulators preparing to raise standards for financial advisers?

Canadian regulators plan to unveil proposals by the end of April aimed at “strengthening the obligations that advisers, dealers and representatives owe to their clients.”

While some see the Canadian Securities Administrators’ statement Thursday as advance notice of just another consultation paper inside a long type of reports and studies pondering higher standards for advisors, the top of an investor rights group is convinced big changes take presctiption the way.

“Their notice says regulatory action is essential to higher align client-advisor interests and to improve outcomes for clients,” said Neil Gross, executive director of the Reason for Advancement of Investor Rights (FAIR Canada).

“At the absolute minimum,” he said, “this suggests ensuring removing things that create incentives to provide sub-optimal advice [such as] trailing commissions, and extremely anything that gets when it comes to giving advice within the client’s best interests.”

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Canada has been swept up in a global overhaul from the adviser-client relationship, with changes already made or arrived in the usa, Australia, and the Uk. But the debate has dragged on in excess of three years.

Groups for example FAIR happen to be pushing for that unbundling of embedded fees from investment products, and a “best interest” standard for advisers that would remove conflicts of great interest by ensuring client needs are always put the main thing on investment decisions.

Opponents say such moves would deprive many investors of use of investment recommendations by pushing advisers from the business and leaving few choices for those who not have the money to pay upfront for advice.

Paul Holden, an analyst at CIBC World Markets Inc. who has been closely tracking the controversy, says it is too early to state what regulators will propose later this month.

Thursday’s statement “doesn’t mean that [a] welfare standard is coming for certain,” he explained. “It is definitely an option the regulators are giving serious consideration, and maybe the move in the U.S. towards best interest will sway the CSA- in that direction.”