FAIR and the Hennick Centre for Business and Law at York University banded together last week to hold a conference in Toronto on the idea of introducing a higher professional obligation – called a fiduciary standard – for investment advisers in Canada, hoping to spur regulators to consider reforms.
A fiduciary standard (already the norm for doctors, lawyers and some other professionals) is a legal requirement that an adviser must put a client's interests first. That includes avoiding conflicts of interest and making the best recommendations for the client even if it means lower fees for the adviser.
In legal terms, breaches of the fiduciary standard can result in tougher penalties and can give advisers less legal leeway to argue clients shared a portion of blame for investment decisions.
Laura Paglia said courts have demonstrated they will rule for clients who argue their advisers have breached the lower standard of "duty of care," without needing to argue there's been a higher breach of fiduciary duty. "We don't need it in Canadian law," says Laura. "It's always been there in Canada through case law, through industry standards and regulations, and through expectations."
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