June 2024

In this month’s newsletter, we highlight a critical milestone in a slow but steady road towards improving Canada’s investor complaint handling system. We also discuss research on the Client Relationship Model Phase 2 (CRM2) and how enhanced disclosures can help investors make better decisions. Lastly, we share our thoughts on investors attending virtual-only shareholder meetings and whether these are more effective than in-person meetings. Keep reading for further insights on these topics and more…

Saskatchewan Leads the Way on Binding Authority for OBSI

In November 2023, the Canadian Securities Administrators (CSA) proposed a significant change—providing the Ombudsman for Banking Services and Investments (OBSI) with the power to make binding decisions. FAIR Canada and other consumer advocates praised this long-awaited move, which will improve investor protection and modernize our dispute resolution system.

At its core, binding authority helps to level the playing field between firms and consumers. Currently, firms can simply ignore OBSI’s recommendations, leaving investors with nothing. Binding authority means firms will no longer be able to disregard OBSI’s decisions. It also means consumers will not feel pressured to accept unfair, low-ball offers because investors can’t enforce OBSI’s recommendations.

FAIR Canada and a growing coalition of investor advocates

are calling on the other provinces and territories to enact similar legislation

to ensure Canadians have a better complaint-handling system.

Although the CSA’s proposal is a crucial step forward, it requires each province and territory to make legislative changes for it to work. Saskatchewan has stepped up to the plate. On May 8, the province passed Bill 150, The Securities (Saskatchewan Investors Protection) Amendment Act, 2023. This makes Saskatchewan the first jurisdiction to enable binding authority for OBSI.

We commend the Government of Saskatchewan for this landmark legislation. It will better protect investors in the province and boost confidence in the financial services sector.

This important legislation addresses the concerns of independent experts who have repeatedly told us that the lack of binding authority harms Canadians. It also brings Canada closer to aligning with its international peers. Financial ombudsmen in the United Kingdom, Australia, New Zealand, Ireland, and the Netherlands, to name a few, all have binding authority.

FAIR Canada and a growing coalition of investor advocates are calling on the other provinces and territories to enact similar legislation to ensure Canadians have a better complaint-handling system. OBSI plays a vital role in giving everyday investors access to justice. It provides a free, informal, and efficient way to resolve disputes, avoiding the considerable expenses and time involved if they needed to go to court. Granting OBSI binding authority will allow it to better fulfill this important role.

An effective complaint-handling system with binding authority is a cornerstone of investor protection. Saskatchewan has paved the way. Now it’s time for the rest of Canada to step up and do the right thing for investors. Gain more insights on Saskatchewan’s binding legislation in our latest press release.

To learn more about OBSI and how it has been helping Canadians for many years, you can view its information and resources.

CSA Study: Impact of CRM2 Finds Promising Investor Outcomes

The CSA published two research reports on April 25, 2024. They examined the Client Relationship Model Phase 2 (CRM2) Amendments’ impact on the investment fund industry and investor behaviour.

The CSA research reviewed the period immediately before and after the CRM2 amendments took effect and evaluated the intended policy objectives: lower fees and better investment fund performance. Below, we provide some key questions and answers regarding the study.

What is CRM2?

CRM2 was a set of new requirements introduced by the CSA to ensure all investors received essential information about the costs and performance of their investments. The amendments came into effect on July 15, 2013, and applied to all investment dealers and advisors in Canada.

Because of the CRM2 amendments, investors now receive more specific details about the cost and performance of their investments. Investors receive this enhanced information through:

• Conversations with their investment advisors.

• More detail on existing account statements and confirmations.

• Two new annual reports: one on fees and another on account performance.

This increased disclosure was intended to enable retail investors to make better investment decisions. The CSA hoped that with greater transparency, retail investors would benefit from more competitive fund pricing and higher performance by their investment funds.

What Did the CSA Study?

The CSA examined whether enhancing the reporting of investment cost and performance led to changes in mutual fund and exchange-traded fund (ETF) fees, product creation, product distribution, and fund performance. The research covered the period between January 2013 and December 2020.

What Did the CSA Conclude?

The research suggests that the industry behaviour is shifting in the way the CSA had hoped with the implementation of the CRM2 amendments. During the study period, average fees declined, and investment performance improved.

The CSA cautions readers interpreting the findings. It concedes that the findings only provide directional trends, and that there may be other factors which would contribute to the changes the research highlights.

Nevertheless, after implementing the CRM2 requirements, the CSA found the following:

• Management expense ratio and management fees decreased, for both mutual funds and ETFs.

• Risk-adjusted returns, relative to benchmarks, improved during the post-implementation period.

• The ETF market grew at a faster rate than the mutual fund market.

• Within the mutual fund market, there was a shift from commission-based to fee-based series.

• There was a rise in demand for funds with an environmental, social, and governance mandate.

What Does This Mean for Investors?

The CRM2 project was a comprehensive, complex, investor-centric policy reform project. The good news is that investors saved billions in fees that would have otherwise gone to the industry. The bad news is that CRM2 took decades to develop, approve and implement. Furthermore, overall investment performance during the survey period was negative. 

Commissioning and releasing the research is always a good practice in policy development. It is good to see the CSA testing for the intended outcomes of major investor-focused policy projects such as CRM2. We encourage the CSA and other regulators to integrate this type of post-implementation evaluation into all major policy projects.

Do You Think Virtual-Only Shareholder Meetings Are Effective?

If you’re a shareholder, do you know your rights when it comes to annual shareholder meetings?

Like many shareholders, when a corporation mails you materials for its annual meeting, you probably throw them in the trash. We get it! Sometimes, it seems like a lot of unnecessary paper and information that nobody wants to read.

However, as a shareholder, you have the right to attend and receive materials for the annual meeting (for example, the corporation’s financial statements and its auditor’s report). You also have important rights that you can only exercise if you attend the shareholder meeting (or appoint someone else, called a proxy, to attend for you).

If you attend the shareholder meeting, you have the right to:

• Vote to elect directors.

• Vote to appoint the corporation’s auditor.

• Vote on special business brought before the meeting (for example, changes to the corporation’s by-laws, executive compensation practices, or shareholder proposals).

• Ask the corporation’s directors and senior managers questions.

• Question whether proper procedures are being followed during the meeting.

• Request more information about meeting procedures or the content of a motion.

As a shareholder, you’re one of the corporation’s owners.

You should have the right to attend an annual meeting and

ask the CEO and directors tough questions...

So, how does all this work when corporations hold virtual-only shareholder meetings?

In theory, virtual-only meetings should work the same way as in-person meetings. A virtual meeting could make it easier for more shareholders to attend, especially if they don’t live in the same city where the meeting takes place.

However, some institutional investors argue that virtual annual meetings can make it difficult for shareholders to exercise their rights. In an Investor Statement, they claim annual meetings that are only held virtually can:

• Be difficult to register for and attend.

• Enable corporations to filter the questions they receive and pick the ones they answer.

• Prevent shareholders from initiating or participating in discussions.

• Prevent shareholders from questioning whether proper procedures are being followed during the meeting.

• Prevent shareholders from requesting more information about meeting procedures or the contents of meeting motions.

If they’re right, this is a big problem! As a shareholder, you’re one of the corporation’s owners. You should have the right to attend an annual meeting and ask the CEO and directors tough questions, without worrying about being muted during an online meeting.

Have you attended a virtual shareholder meeting and felt as if you weren’t being heard? You should let someone know about it. Specifically, we suggest you contact:

• Your local securities regulator.

• Your legislative representative in your province or territory.

Interested in learning more about your rights as an investor? Check out FAIR Canada’s resources.

What’s New

FCNB’s E-Learning Module on Financial Exploitation of Older Adults

The Financial and Consumer Services Commission (FCNB) of New Brunswick produced a free, one-hour online course called Financial Exploitation of Older Adults: The Invisible Crime of the 21st Century.

The course helps you learn about and recognize financial exploitation to protect yourself and people you care for. It’s designed to assist professionals, frontline workers, caregivers, family members, and older adults. The course covers:

•      Understanding what financial exploitation is.

•      Identifying its signs.

•      Learning prevention steps.

•      Knowing how to report it.

To get started with the course, enrol now!

OSC: Investor Resources for Investors – Where to Go When You Need Help

The Ontario Securities Commission (OSC) has created a new resource for investors to help those who may be stressed because of investment losses or other difficulties. This resource includes carefully selected websites and tools to help you get answers to your questions and to connect with community support. You can find information on topics from fraud prevention, consumer protection, mental health resources to crisis helplines. To learn more, explore the OSC’s investor resources at Get Smarter About Money.



Throughout the year, FAIR Canada submits many comment letters on various important policy and regulatory matters that have an impact on investors. Read more about our investor advocacy work.

We’d Love to Hear From You!

Do you have feedback on our newsletter or suggestions for topics you’d like us to write about? Your input is valuable and will help us improve our newsletter content for loyal subscribers like you. Please email us at info@faircanada.ca with your comments and/or suggestions.

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To learn more about our advocacy for investors, visit FAIRCanada.ca