Ontario regulators poised to gain power to use courts to collect fines
TORONTO The Ontario government is preparing to introduce legislation that will allow self-regulatory agencies to use the courts to collect fines for wrongdoing.
“As a public interest regulator, this new enforcement tool will enable us to provide stronger protection to the investing public and collect fines from wrongdoers who have previously evaded paying the penalty for their misconduct,” Andrew Kriegler, chief executive of the Investment Industry Regulatory Organization of Canada, said Friday. “When passed, the amendments will help IIROC hold wrongdoers accountable for their actions, send a message of deterrence to potential wrongdoers and collect the fines it levies on firms and individuals in Ontario — fines which IIROC uses to fund investor protection, investor education and financial literacy initiatives.”
The new rules would also apply to the Mutual Fund Dealers Association.
Both regulators levy far higher fines each year than they are able to collect. IIROC has nearly $20 million in unpaid fines dating back to 2008. The total across the country is almost $32 million.
Last year, the self-regulatory agency was able to collect only eight per cent of fines levied across the country against individuals who breached the regulator’s rules. Among the wrongdoing was misappropriation of funds from clients, falsely endorsing client signatures, and making unsuitable recommendations to investors.
Kriegler, who took over as CEO of IIROC in late 2014, has been pushing to get the power to file the regulator’s decisions with the courts across the country, which makes it easier to collect fines.
He made it a priority after seeing the impact in provinces such as Quebec, where the change was made in 2013. Two years later, the regulator collected 59 per cent of fines levied against individuals in that province.
In Alberta, where similar powers have existed for a number of years, 26 per cent of fines and penalties were collected from individuals between 2008 and 2015. Although that’s lower than the Quebec figure, it beat the national average.
Advocacy groups say many of those affected by wrongdoing in the investment industry are seniors who suffer significant financial losses. “I have had heartbreaking conversations with members who have lost their life savings,” said Wanda Morris, chief operating officer of CARP, formerly known as the Canadian Association of Retired Persons. “There is more to be done, but today’s announcement is a critical first step,” she said.