Best served by a single regulator
There are times in any family where disagreements arise. Where is the best place for aging parents to live? Where to celebrate Christmas? And don’t forget virtually anything that has to do with money.
For years, Canadian provinces and the federal government have been entangled in a family feud that is at its core about investments, financial oversight and turf protection. Among the federal parent and many of the provincial siblings, there is the long-sought-after dream of a national securities regulator — a single body that would establish rules for companies seeking public investment and enforce those rules to protect investors from shady dealings.
Canada is one of the few western countries to lack a common national regulator. Instead, those issues are handled by 13 provinces and territories, each with its own securities oversight system. The result is a patchwork of bureaucracy, rules and duplication — an utter throwback in an era of globalized commerce and international investment.
And yet Alberta, along with Quebec, remains a stubborn holdout on this important issue.
In 2011, the Supreme Court of Canada gave credibility to that intransigence after it ruled the Harper government’s plan to establish a single, national regulator was unconstitutional and an abuse of federal power in the provincial domain of property and civil rights.
That decision was a victory for provincial rights. But with that win, Alberta should have moved on from its hang-ups over turf to think about what was good for the entire Confederation family, including Alberta investors and businesses.
That, in fact, is just what Ottawa, Ontario and British Columbia (the biggest players in the country’s investments and securities scene) said they would do, announcing that they would voluntarily form a common regulator, with the aim of launching this new system in the fall of 2015. Last week, Saskatchewan and New Brunswick said they would also join the effort. Combined, those jurisdictions account for about three-quarters of Canada’s listed companies.
Alberta’s provincial government predictably, but mistakenly, said it will not waver from its go-italone approach. “We’re not going to be bullied into signing something that’s not right for Alberta,” Finance Minister Doug Horner said, echoing predecessors in the finance portfolio who used similar tough talk on the subject.
In a statement, Horner said the co-operative approach of four provinces with the federal government will create a more fractured system than the one today. That math just doesn’t add up.
It is true that Alberta has put forward its own proposal for a new national enforcement agency, which Horner says would toughen up the regulatory regime but allow provinces to keep hold of economy-building tools through the securities system. It is an idea that probably would have had more credibility if Alberta had said it was willing to play ball from the beginning. When you refuse to sit at the family dinner table for weeks, it’s hard to complain about the meal you are served once you do finally take a seat.
Alberta has vigorously lobbied for the removal of interprovincial trade barriers. That’s the right move in a country where goods and services need to travel freely. Alberta must apply the same common-sense principles to investments and securities.
Since many Canadians are investors, especially through avenues such as retirement savings, this is no venue for a Wild West mentality. A national regulator would have the heft to provide cohesive enforcement and oversight. It’s time we bought into the idea.