A survey by the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada) has revealed that Canadian retail investors have low familiarity with the regulations governing the investment industry. The survey of 1,500 Canadian retail investors conducted in May found that only eight per cent of all respondents were very familiar with the regulatory framework in their province and could explain it to others.
Key survey findings on investor knowledge
According to the survey, 39 per cent of respondents were somewhat familiar with the regulatory system but could not explain all the details. Meanwhile, 36 per cent said they had limited understanding, and 17 per cent had not heard about the regulatory framework before being asked.
“Focus group participants were largely unaware of the organizations responsible for overseeing the investment industry in Canada,” the report said. “Only a few could name specific organizations, express awareness of how the regulatory system works, or explain what protections apply to them.”
Regulatory structure in Canada
Each province has a regulator responsible for overseeing the investment industry. Their role includes setting and enforcing rules that investment firms and advisors must follow when working with investors, including how investments are sold and what information investors receive. For most types of investment firms and advisors, day-to-day oversight is delegated to a self-regulatory organization called the Canadian Investment Regulatory Organization (CIRO).
The report noted that awareness of Quebec's Autorité des marchés financiers (AMF) was somewhat higher than awareness of provincial regulators in English-speaking groups, primarily driven by awareness of fraud enforcement.
Investor uncertainty and regulatory implications
The survey also found that close to one-third of investors are unsure if a regulator exists, and only 16 per cent can correctly name the regulator unaided. “As policymakers consider expanding retail access to private and exempt market investments, these findings provide important insight into what investors really want from the system,” said Jean-Paul Bureaud, FAIR Canada’s chief executive.
Other key findings include that more investors (51 per cent) supported restrictions on higher-risk or complex investments than opposed them (43 per cent). Additionally, while most investors report positive experiences with advisors, only 72 per cent believe their advisor puts the client’s interests first, leaving nearly three in 10 investors unsure or unconvinced.
“We undertook this research to ground our priorities in the views of investors themselves and to help ensure regulatory policy is focused on the outcomes investors value most,” said Bureaud.
