OSC Notice 11-794 and Request for Comments – Statement of Priorities for Financial Year to End March 31, 2023

December 20, 2021

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OSC Notice 11-794 and Request for Comments – Statement of Priorities for Financial Year to End March 31, 2023

Letter Summary:

The OSC is currently seeking comments on its draft 2022-2023 Statement of Priorities (SoP) to inform its business planning for the fiscal year ending on March 31, 2023. The OSC has set outs its four strategic goals, and the priority initiatives it will pursue in support of those goals. The first goal, promoting confidence in Ontario’s capital markets, will be supported by work such as the implementation of the mutual fund embedded commission rules, improving the retail investor experience and protection (e.g., the OSC seniors’ strategy), and strengthening dispute resolution services. The OSC also intends to develop total cost reporting disclosure for mutual fund investors and segregated fund holders. Reflecting the new OSC mandate to promote competition and foster capital formation, the second goal is to modernize the regulatory environment. This goal will be supported by implementing an enhanced framework for modernizing regulation and continuing work on streamlining periodic disclosure requirements for reporting issuers and modernize delivery options. Under the goal of facilitating financial innovation, the OSC will continue to use its Innovation Office for novel businesses and expand the OSC TestLab. The fourth goal, strengthening the organizational foundation of the OSC, involves investing in its people, technology and information systems. It continues to seek to redevelop CSA national systems (e.g., SEDAR+), digital transformation and data and analytics enablement. The OSC has removed reducing regulatory burden as a specific goal within this year’s SoP on the basis that it has become integrated into its core operational work.

Overview of the Council’s Comments:

The CAC is supportive of many of the priorities set out in the SoP, as well as the general process for engaging stakeholders in a timely manner.

With respect to promoting confidence in Ontario’s capital markets, the CAC strongly supports the implementation of the ban on the use of DSCs, and of trailing commissions where no suitability determination is made. These practices created irresolvable conflicts of interest between registrants and their clients.
The CAC reiterated strong support for the strengthening of OBSI’s decision making authority. We believe OBSI’s role as an independent dispute resolution service for the securities industry should be supported. Under priority 1.5, it is noted that the OSC will provide an analysis of a framework for binding decisions of a dispute resolution service, such as OBSI, within increased claim limits. The CAC urged such analysis be made public.

With respect to vulnerable clients, the CAC stated that more proactive and forward-looking policy research should be undertaken in this area for a better understanding and adaptation of the client-registrant relationship and regulation to the unique challenges of aging and vulnerable clients. Given the concentration of wealth at this juncture in an aging segment of the Canadian population, demands for expertise here will only increase the call for research and policy leadership.

The OSC’s commitment to implement the BlackNorth Initiative (BNI) CEO pledge is laudable but, Indigenous reconciliation is absent alongside this commitment in the SoP. Data from reporting issuers indicates significant Indigenous under-representation within senior management and boards, and anecdotal evidence suggests significant under-representation within registrants and at securities regulators in Canada. The CAC called on the OSC to educate staff by implementing Truth and Reconciliation Call to Action 57 (Professional Development and Training for Public Servants) and embrace Call to Action 92 (Business and Reconciliation). These initiatives might be best implemented throughout the CSA, forming the basis for a wider CSA initiative on Indigenous reconciliation.