The Ordre des comptables en management accrédités du Québec (CMA) yesterday presented its brief on protecting Quebec investors at public hearings held by the Committee on Public Finance of the National Assembly. Since its members are not associated with the sale of financial products, the Order was entirely objective in its recommendations. Protection of the public, which is at the heart of its activities, was the main motivation for the Order to take part in the search for potential solutions for problems related to mutual funds. Although it entirely supports the Committee’s objective of ensuring better protection for investors, the Order recommends extreme caution, in order to avoid compromising the smooth functioning of an industry that is essential to our economic activity and the trap of overregulation.
Where governance is concerned, the Order favors the establishment of an independent review committee to monitor conflicts of interest, especially those of a commercial or operational nature, where there is currently a disturbing absence of relevant securities regulation.
The exchange of information between the regulatory agencies and police services is vital to accelerating the investigation process. The recent legislative amendment that allows the Quebec CA Order to reach agreements with certain organizations that exercise complementary public protection functions, especially the Autorité des marchés financiers, seems to be an effective way to achieve this goal. Moreover, at the appropriate time, once CMAs can practice public accounting, and to ensure consistency in law and the protection of the public, the lawmakers ought to allow the Quebec CMA Order to exchange information as well.
The Order entirely supports increases in minimum penalties because the courts currently treat economic crimes as secondary crimes. The desired dissuasive effect will then be achieved. As for the introduction of new third-party liability, i.e. for lawyers, accountants, brokers and other professionals, the Order warns the Committee on Public Finance against the temptation to recommend stricter legislation. Paralyzing an industry that is already heavily regulated should be avoided, especially since the current professional system provides adequate protection of the public.
Finally, the impacts of separating the functions of manager, promoter, trustee and principal distributor on the viability of certain small firms and on access to the market by small companies must be considered. The additional costs of such a measure will certainly have consequences for small investors.
The Order also urged the Committee to show caution with respect to investor compensation. Quebec is already unlike other jurisdictions with its Fonds d’indemnisation des services financiers, which is sufficient if incomplete. Improving the compensation programs may reduce the accountability of both investors and the various participants involved in the management, promotion and distribution of mutual funds. Not to mention that the costs associated with a more extensive compensation program would be passed on to investors, since the yields of the mutual funds would be reduced accordingly.
The Ordre des comptables en management accrédités du Québec, which has more than 8,200 members and candidates to the profession, provides leadership to the CMA profession through the enforcement of high standards and the recognition of the designation. CMAs create value within organizations through an integrated and systematic approach to strategic and financial management.
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To read the brief in its entirety (in French), click here.
Source: Quebec CMA Order
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Ordre des comptables en management accrédités du Québec
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