PMAC advocates on behalf of our members and their clients to elevate standards across the industry and create both harmonized regulation and more cohesive capital markets
PMAC advocates on behalf of our members and their clients to elevate standards across the industry and create both harmonized regulation and more cohesive capital markets
Representing
Our Members
In a highly fragmented regulatory environment, it can be hard for our members’ concerns to be heard – we amplify their voices. By representing more than 300 portfolio management firms across Canada, we have the experience, expertise, and we listen to the challenges of our membership and speak on their behalf to make sure their concerns are being heard to create a stronger and more accountable industry for investors.
Advocating for Our Members
We encourage policymakers and regulators to take a holistic approach when developing new regulations and legislation, making changes only after conducting an extensive cost-benefit analysis to understand the impact on portfolio managers and investors. While new rules and policies may be crafted with the best of intentions, they can add an undue burden on our members that may not yield the desired investor protection outcome.
We are ideally positioned to help identify gaps and comment on pending policy and regulation changes. As fiduciaries, our members are committed to the highest ethical standards and sharing unbiased views. We embrace those same values in our advocacy to help advance standards that hold the industry accountable for investors.
We solicit the views of our members and consolidate their thoughts on industry challenges and ongoing policy discussions. As part of our process, we thoroughly test and refine our input with our expert committees before sharing them with policymakers and regulators to ensure we’re advancing the conversation.
We seek to partner with regulators and policymakers to address behaviour and actions that undermine the efficiency, fairness and stability of our markets. Together, we believe we can find effective solutions that reduce the burden on our members.
To ensure any new rules and legislation have their desired impact, we inform members of pending changes at the earliest opportunity. This ensures they understand the policy objectives and have the time to proactively prepare their businesses to meet new standards.
OUR PRIORITIES
ONE STANDARD
We strive for one set of rules. We believe harmonizing the regulatory and policy environment is not only in the best interests of the financial industry, but also for all Canadians. Managing different regulations and policies in different jurisdictions – both in Canada and abroad – can create confusion and opportunities for regulatory arbitrage.
INVESTOR PROTECTION
We strive to balance the regulatory burden with investor protection. Given the different business models and clients our members serve – from higher-net-worth individuals to institutional investors – we favour a principles-based approach that respects the goals set by the provincial regulators rather than a set of prescriptive rules that may impair the ability of our members to serve their clients.
TAX FAIRNESS AND INVESTOR TRANSPARENCY
Our members have a lot to offer to the investment industry. What they don’t always have is the time or relationships to ensure their viewpoints on tax fairness and improved investor transparency are heard. We provide our members with a platform to share their perspective and insights with policymakers and regulators.
OUR PRIORITIES
Easing the Burden, Maximizing the Impact
Since its launch in 1952, PMAC’s focus has been on maintaining high standards of professional conduct in the financial industry, including the overarching principle of a portfolio manager’s fiduciary duty to its clients. For portfolio managers, the fiduciary duty extends to all aspects of the adviser’s relationship with the client. We support high educational and proficiency standards to support this fiduciary duty of care. PMAC has advocated that all financial professionals who provide investment advice to clients should be required to act under fiduciary principles.
The principles-based regulatory framework has proven to be effective at adapting to various portfolio manager business models while protecting investors and enabling growth in Canadian capital markets. PMAC opposes overly prescriptive regulation that results in one-size-fits-all requirements, that are not adaptable to the variety of business models and client types that exist in the Canadian investment industry. For example, PMAC consistently advocates for specific carve-outs for institutional clients in cases where the regulation is neither effective nor necessary for these sophisticated investors. Principles-based regulation avoids the necessity for such carve-outs and other exemptive relief.
Effective oversight of the portfolio management industry is critical to investor protection. PMAC believes that direct regulation by members of the Canadian Securities Administrators (CSA) is stronger regulation, and that regulation of portfolio managers should not be delegated to a Self-Regulatory Organization (SRO). The CSA is a proven and experienced regulator; its principles-based approach to portfolio manager regulation is appropriate, effective and aligned with international regulation. Principles-based regulation provides the flexibility required to respond to and promote the wide variety of business models and types of investors served by portfolio management firms, including investment counsellors, managers of pension and foundation funds, robo-advisers, family offices and global asset managers, to name a few. We believe direct regulation of portfolio managers is consistent with the vast majority of International Organization of Securities Commissions (IOSCO) member countries that have abandoned the use of SROs in the financial sector.
PMAC consistently advocates for the harmonization of regulatory requirements for asset managers across Canada and internationally where possible, and discourages requirements that impose duplicative and/or conflicting obligations. Harmonized regulation and legislation between provinces allows firms that operate in multiple jurisdictions to operate seamlessly across Canada. This reduces costs and improves efficiency for businesses, and leads to improved regulatory compliance. Harmonization ensures that investors are receiving the same protections regardless of where they reside, and improves the investor experience.
Small independent firms are the backbone of the portfolio management industry across Canada, providing asset management to myriad clients including individuals, families, businesses, charities and pension plans. The rapid increase in regulation has made it challenging for many small portfolio manager businesses to keep up to date and remain compliant. Sometimes regulations are not proportional to business size, type or risk, and can impose undue costs and burden on small businesses and new entrants to the market. It is important that regulation remain principles-based and adaptable to different business sizes, models and client types. PMAC recognizes the important role small businesses play in the financial industry and encourages regulators to focus on regulatory burden reduction for these firms.
PMAC encourages government and regulators to consider the cost and pace of regulation and to monitor the impact of all types of regulation on the businesses they regulate. This may include, for example, securities regulation, privacy law requirements, anti-money laundering and anti-terrorist financing regulations, tax law and other requirements. Regulatory initiatives should be based on data, evidence and a clear investor protection rationale. Unintended consequences and regulatory burden should be considered. Regulators should conduct cost-benefit analyses on a regular basis and aim to streamline regulation where possible, eliminate duplication, minimize costs and optimize impact.
PMAC closely monitors tax and other rules and regulations impacting Canadians’ retirement savings. We support levelling the tax policy playing field between all retirement savings programs and are advocating for a change to the tax treatment of pooled funds to achieve this goal. The proposed change would eliminate restrictions on certain pooled funds that invest internationally, and would allow Target Date Funds, which are widely used by employers for employee retirement savings programs, to merge upon fund maturity without triggering negative tax consequences for employees and retirees.
PMAC remains business model agnostic and welcomes firms that are registered portfolio managers with CSA members. Business models and investment strategies vary among PMAC members (e.g. both active and passive). We support regulation that promotes a level playing field for both active and passive strategies or combinations of strategies. PMAC believes that providing investors with a range of choices is beneficial and encourages innovation and competition in the capital markets.
Sustainable investing and the incorporation of Environmental, Social and Governance (ESG) factors into asset management are important considerations for a growing number of PMAC members. This is driven principally by the increasing interest in ESG and prudent risk management among both individual and institutional investors. PMAC supports consistent, reliable, and comparable ESG disclosure by corporate issuers to assist in investment decision-making and harmonized ESG regulation in Canada and internationally, where applicable.
PMAC is working collectively with our members to seek to promote DEI within the financial industry and to provide education, information and resources to help foster positive change. PMAC supports regulation that improves transparency of diversity beyond gender within corporate issuers and in the industry.
