Fiduciary duty – a long time overdueIan Whiting
As most Canadian readers will know, the concept of mandating that certain advisors have a legally binding fiduciary duty to their clients has been gaining strength recently. Long overdue in my opinion!
Ignoring fancy legal words, a fiduciary duty or responsibility is to put the interests of the client FIRST, before the interests of the advisor. While for professional advisors this should be self-evident (and has always been part of my personal standard of integrity), regulators seem to feel the need to add more regulatory teeth to this issue.
So far, the impetus in Canada has come from the CSA (no – not the Canadian Standards Organisation – The Canadian Securities Administrators) which is a policy group consisting of the top Securities Regulators in each Province and Territory – and yes this includes Québec. They provide policy direction to Provincial Regulators and try and make the rules consistent across the country. There is a parallel insurance industry group called the CCIR (the Canadian Council of Insurance Regulators) which functions in the same manner as the CSA for the life and general insurance industries. I am going to presume that the folks on the CCIR are paying close attention to the work of their colleagues on the CSA and we can expect further action on the insurance side of the Canadian money world soon. Good stuff! HOWEVER, there is a problem from my perspective – what about the rest of the financial community??
What about banks, trust companies, credit unions, caisse populaires? How about household financing companies, mortgage lenders and brokers and payday lenders? What about vehicle dealers and their financing arms? Have people considered the furniture and appliance dealers and their lending practices? Even issuers of credit cards should be subject to this duty – some could argue they are the biggest offenders of not putting the interest of the client or customer ahead of their own! What about MLM businesses that require an “investment” by new “distributors” before they can play the game? Who is considering this issue beyond just the “investment” industry?
How do we, as a society, deal with those unscrupulous folks such as Earl Jones who was never registered or licensed in the first place? It wouldn’t matter what rules were in place via IIROC, the MFDA or the equivalent bodies in Québec for the Mr. Jones’ of this world. How will this impact Ponzi-schemes and the perpetrators behind them?
My next blog will examine some of the costs that will have to be paid – by guess who?? The consuming public is the ONLY source of $$ to pay for regulation and they need to be fully informed of this aspect as well!
Posted: February 11th, 2013 under Banks, Communications, Estate Planning, Exchange-Traded Funds, Exempt Market, Finance, Financial Planning, General, Government, Guaranteed Investment Certificates, Insurance, Investments, MONEY®, Mortgages, Mutual Funds, Pension, Personal Finance, Real Estate, Saving, Tax-Free Savings Account, Taxes, Trust.
Tags: banks, conflicts of interest, fiduciary, investments, lending, Ponzi-schemes, regulations, scams