FAIR Canada » Putting Clients’ Best Interests First

"Putting Clients' Best Interests First" is an appropriate headline for this conference on fiduciary standards. From the discussions with participants from Canada, the United States and the United Kingdom it appears as no surprize that Canada is lagging behind in investor protection. The principle reason is of course industry culture which is "me first". The failure of legislators and regulators to hold manufacturers, distributers and sellers of financial products to a fiduciary standard spells trouble for investors.

While lawyers (at least those representing industry) may argue that our standards for duty of care provide adequate protection for investors, they seem to overlook the fact that limitation periods in most provinces have been reduced to two years from six years (the statute of limitations) which means simply that if you fail to take civil action within two years of the causal event you could be statute barred from seeking dispute resolution through the courts.

Most victims of substantial loss will take more than two years to get their heads aroung the impact of this life altering event, find out how to address the issue, and proceed through the industry's process (which unfortunately seems a necessary evil).

If the financial predators had fiduciary responsibility the limitation period is longer, as it should be. If you have a managed account or a discretionary account a fiduciary duty is implied. However, it is common practice for brokers to handle your account as a discretionary account without completing the requisite forms. Completing the forms is not in the broker's best interests as it imposes a higher standard.

Let us hope that something positive will evolve from this important exchange. There is no doubt that the financial market meltdown has raised awareness across the board.