Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/354755
MORTGAGEBROKER mbabc.ca summer 2014 | 31 oscproposal New Brunswick and Saskatchewan? 1 Perhaps there is a reasonable explanation here. However, given the commitment between the provinces of Ontario and B.C. to share a common regulatory structure, would it not be appropriate to review the B.C. OM exemption requirements? e optics of failing to harmonize Ontario's proposed new OM requirements with those of B.C. in light of the single regulator plan are simply not good. Satisfying investor protection goals It is not entirely clear what the specifi c goals are of the OM investor cap of $30,000. e OSC proposal provides the following rationale for the cap: "In our view, limits on both eligible and non-eligible investors are appropriate to limit the amount of money that retail investors invest in the exempt markets." Are the goals to save investors from the folly of investing too much of their hard earned money in the exempt markets, or is it an eff ort to limit the harm to investors from investor frauds, such as ponzi schemes or sham investment entities? As you may be aware, government regulation is usually ineff ective at reducing fraud, as fraudsters never intend to comply with rules, particularly ones that would limit the funds they can misappropriate. Creating more rules or more restrictive rules will not change this unfortunate reality. Tackling investor fraud will likely require a collaborative eff ort between criminal justice systems, government regulators and the industry. Failing to empower consumers e governing principle behind the exempt market is that investors take on risk. is is why they sign a risk acknowledgement form and receive suitability advice from a registered exempt market dealer. In addition, investors can read an OM that contains details of the investment, which is o en more detailed than a prospectus. e OM contains protections for investors, including the right to sue directors for misrepresentation and the 1 Update: At the time of going to press, the Federal Minister of Finance announced that Saskatchewan and New Brunswick intend to join the co-operative securities regulator. right of rescission. Taking away investor choice by placing low investor limits on OM exempt investments treats investors like children who cannot manage their own money and renders current investor protections redundant. We believe that consumers should ultimately be responsible for looking a er their own interests and taking responsibility for their own choices. e goal of government should be to ensure that consumers are empowered to make informed, careful investment decisions. Providing consumers with relevant knowledge is actually a much more powerful consumer protection tool than imposing a system of paternalistic regulation over them. Red tape and enforcement challenges e $30,000 annual investor cap appears to be cumbersome to administer. It is not entirely clear how the investors' limits will be tracked. What if investors are not honest in making investment declarations? Who takes action against the investor in this circumstance? What if the appropriate suitability advice rendered by an exempt market dealer is that the investor should invest more than $30,000 in the exempt market? Does the exempt market dealer render that advice despite it being impossible for the investor to follow? e OSC might wish to choose whether to pursue investor protection using a client focused