Clients’ best interests

One would think the notion that financial advisers should be required by law to put their clients’ best interests ahead of their own would be rather uncontroversial. Yet for more than a decade, efforts to create a national best-interest standard have gone nowhere. Last week, after five years of negotiations, all but two of the country’s provincial financial regulators walked away from the idea.

That’s a shame. At a time of low interest rates and increased capital requirements, Canadian banks nevertheless continue to see skyrocketing profits, boosted in part by a troubling combination of exploitative sales practices and inadequate consumer protection.

The Ontario Securities Commission and its New Brunswick counterpart now say they intend to go it alone on pursuing such protections. That would be a welcome step, but no substitute for a national standard. Everyone in the country deserves to be protected from unethical financial practices.

That’s now up to Ottawa — and the feds have a golden opportunity. The Trudeau government is in the process of reviewing the federal legislation governing financial institutions, and is looking to replace the provincial regulators with a single national body.

The notion that banks should be allowed to pursue their self-interest unchecked, that the only protection consumers deserve is their own skepticism, is not just nasty; as the 2008 financial meltdown showed, it’s also dangerous. A national best-interest standard would be in the best interests of clients, yes, but also of the country.