Canadian Lawyer InHouse

SEPTEMBER/OCTOBER 2018 40 INHOUSE able investors are taken advantage of or pro- vided with negligent advice. The OSC introduced a staff notice this spring entitled "seniors strategy." It is de- scribed as an action plan for "responsive regulation" to protect older investors. The British Columbia government is the lat- est province to enact legislation that will permit the Investment Industry Regula- tory Organization of Canada to obtain civil judgments in the courts to make it easier to collect fines imposed on individuals who breach its rules. Six provinces have now moved to provide this power to IIROC as well as other mea - sures to enhance its "enforcement toolkit." Elsa Renzella, senior vice president for reg- istration and enforcement at IIROC, says provinces have been "very receptive" to enacting these changes. "It increases deter- rence. The penalties are real. We can take a decision and register it with a court. It will be treated similar to a civil judgment," she explains. Individuals sanctioned by IIROC "can't simply flee the jurisdiction," Renzella adds. At least 30 per cent of complaints it receives are related to older investors, so en - forcement in this area has long been a prior- ity for IIROC, she says. Proposed changes to enhance investor protection in this area were also announced in June by the Canadian Securities Admin - istrators, with a 120-day comment period that ends in mid-October. Among the rec- ommendations are increased requirements to "know your client" and "know your prod- uct" to ensure that clients receive advice that best meets their "suitability" in terms of investments. However, an outright ban on embedded commissions is not among the recommendations, nor is the "best interest" standard that some regulators suggested, to impose a higher duty of care on advisors. In the case of older or vulnerable inves - tors, though, one aspect of the OSC's se- niors strategy has received positive feedback from the financial services sector. If ulti- mately enacted, it would require registrants to make reasonable efforts to obtain contact information for someone the client desig- nates as a "trusted contact person." An advi- sor could then seek to speak to that person if there are concerns about a client's behaviour or decision-making capacity. While this person would not have the legal authority of a power of attorney, it is potentially another layer of investor protec - tion, says Tamblyn Watts. "Older people are allowed to be financially foolish, as long as they are not acting under undue influence or have a diminished capacity," she says. At the same time, she warns that advisors need to ensure that the "trusted contact," who might be a family member, truly does have the client's best interests at heart. "That person might be the abuser," she states. Where there appears to be consensus is that the role of a financial advisor is likely to become more complex and subject to more scrutiny when dealing with older clients. "It is about finding the right balance be - tween privacy and dignity and taking rea- I n d u s t r y S p o t l i g h t CORPORATE COUNSEL Connect with Find more than 4,100 corporate counsel and over 1,500 organizations along with fresh editorial content, information on deals and links to important resources. Lexpert.ca/ccca Untitled-6 1 2018-08-16 3:16 PM

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