CARP is providing strong recommendations to the Ontario Capital Markets Modernization Taskforce (OCMMT) to better protect at-risk older investors ahead of proposed reforms.
Established in February 2020, the OCMMT and its five members is mandated to guide the transformation of the regulatory landscape for capital markets and reports directly to the Finance Minister on how to best protect Ontario investors (download our submission here).
While the current focus of the work is on Ontario, there are significant implications to investors across Canada. The majority of financial institutions in the capital market sector are registered in Ontario, so any reforms will have a ripple effect across provincial and territorial lines. Most notably, the Ontario government is currently establishing a cooperative capital markets regulator, in collaboration with the federal government and the governments of British Columbia, Saskatchewan, New Brunswick, Nova Scotia, Prince Edward Island and Yukon. This newly-formed regulator would replace the securities commissions of the participating jurisdictions, with additional authority from the federal government, to manage systemic risk in Canadian capital markets. The results of the OCMMT will have an impact on this nationwide process.
CARP’s recommendations on behalf of its 150,000 members in Ontario include:
- binding arbitration powers and a higher compensation limit for the Ombudsman for Banking Services and Investments (OBSI);
- compensation to harmed investors be made a top priority;
- access to more mutual funds and savings-type investments through bank-owned discount brokers, and;
- targeted electronic notifications to ensure seniors do not miss key documents concerning their investments.
“Seniors in Ontario are routinely victimized by their financial service providers and unfairly pay the price at a time when they rely on their investments to sustain their retirement,” notes Bill VanGorder, CARP’s Chief Policy Officer. “High fees, sub-optimal advice and an unwieldy complaints system put all older investors at serious risk.”
CARP supports the work of the OBSI, but notes that it has a significant visibility problem, resulting in too few seniors utilizing their services to seek compensation for wrongful losses. Ombuds offices in comparable countries process significantly more complaints than does OBSI (in 2019, the Australian and United Kingdom Ombuds offices handled 138 and 77 investment complaints per million citizens respectively, with Ontario lagging behind at just 11 cases per million).
“In order for Canadian investors to be adequately protected, claims to OBSI need to increase significantly,” warns VanGorder. “Older adults need to be made aware that the OBSI is there to help when they need it and what they do. That will require far better disclosure of their services than its member firms are currently providing”.
CARP believes that investor protection should be the linchpin of capital markets regulation and that any proposed changes should be made through an “investor-friendly lens”; putting the needs of the average Ontarian before those of the financial firms and advisors who stand to profit from their losses.