REBUILDING THE PUBLIC'S TRUST IN THE FINANCIAL SERVICES INDUSTRY - ETHICAL STANDARDS

Public trust in the financial services industry has been badly damaged and financial advisors must commit to higher ethical standards to earn it back, says Margaret Franklin, chairwoman of the board of governors of the CFA Institute and president and CEO ofToronto-based Kinsale Private Wealth Inc.


Investor protection should be advisors' top priority, she told a Canadian Club audience in Toronto earlier this month: "There must be a commitment to professional excellence and ethical standards that goes beyond lip service." Advisors should be well trained on how to deal with ethical dilemmas, she adds, and better securities enforcement practices are also necessary to rebuild public trust. Franklin calls Canada's experience with enforcement "exceptionally poor."


Franklin recommends an overhaul of the Royal Canadian Mounted Police's integrated market enforcement teams, and for securities regulators to hire more staff with experience in the financial services industry. She also suggests granting the industry's self-regulatory organizations the statutory ability to collect fines in all provinces and territories so that wrongdoers cannot avoid penalties by leaving the industry.


"We must do everything in our power," Franklin says, "to' ensure that investors are better protected in the future." 



Megan Harman 
Investment Exceutive
Mid - January 2011