The Canadian Securities Administrators (CSA) published for comment Consultation Paper 33-403 CSA Consultation Paper 33-403 The Standard of Conduct for Advisers and Dealers: Exploring the Appropriateness of Introducing a Statutory Best Interest Duty When Advice is Provided to Retail Clients which discusses the potential benefits and feasibility of imposing a statutory fiduciary duty on advisers and dealers to act in the best interests of clients.
The Consultation Paper describes a possible statutory best interest standard and discusses whether this standard should be adopted. It also looks into whether another policy solution would be more effective or whether the current Canadian standard of conduct is sufficient. “The application of such a standard has been the subject of much debate in Canada and internationally, and requires careful consideration to determine the right solution for the Canadian context,” said Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission. “Today’s Consultation Paper demonstrates Canadian securities regulators’ commitment in examining opportunities to improve the relationship between clients and their advisers and dealers in order to ensure effective protection for Canadian investors.”
A fiduciary duty is a duty of a person to act in another person’s best interests. Currently securities legislation in Canada imposes a duty on registered advisers and dealers to deal fairly, honestly and in good faith with their clients. This duty applies to advisers and dealers broadly in all dealings with their clients.
The report compares the standards imposed on dealers and advisers in foreign jurisdictions and reviews the potential benefits and feasibility of imposing a new standard in Canada.
The CSA makes it clear in the Consultation Paper that no decisions on this matter will be made without broad public consultation and discussion.
Learn more about how an adviser gets paid by visiting the Globe & Mail’s “The flaws in Canada’s financial adviser system”. Other publications on this and similar topics can be found through our Investment Product and Wealth Management group.