On June 18, 2024, the Ontario Securities Commission (OSC) released the 2023 annual report of its Investor Advisory Panel (IAP). The IAP’s report provides insights and recommendations that are pertinent to participants in the Canadian capital markets. The following summarizes the key findings and themes, along with an analysis of how these might impact businesses and decision-making processes.

Purpose and importance of the IAP annual report

The annual report outlines the IAP’s advisory activities and perspectives. The IAP's contributions are important in shaping policies that protect and promote the interests of retail investors in Ontario. Understanding these insights is important to adjust to regulatory changes and enhance investor relationships.

IAP’s role and advisory process

The IAP serves as a voice for retail investors in policy development within the OSC. The IAP participates in a multi-faceted advisory process, offering expert opinions and recommendations through:

• Consultations
• Submissions on policy proposals
• Regular panel meetings
• Engagement with external organizations

IAP activities in 2023

In 2023, the IAP was actively engaged in a variety of activities, including:

• Hosting panel meetings
• Providing submissions on policy initiatives
• Holding consultations with key stakeholders
• Meeting with numerous external organizations to garner diverse insights

Key themes and insights from 2023

The IAP focused on seven primary themes throughout 2023, each bearing important implications:

1. Investor vulnerability
   • Highlighted issues affecting vulnerable investor groups.
   • Emphasized the need for enhanced protections and tailored regulatory responses.
2. Regulatory clarity and consistency
   • Called for clearer regulatory guidelines to improve compliance and investor confidence.
   • Discussed the impact of inconsistent regulations on market stability.
3. Financial literacy and education
   • Stressed the importance of financial education initiatives.
   • Recommended programs to enhance investor understanding and decision-making.
4. Technology and digital assets
   • Addressed the rising influence of technology, including the risks and benefits associated with digital   assets.
   • Provided insights into regulatory frameworks for emerging financial technologies.
5. Cost transparency
   • Advocated for greater transparency in cost structures related to financial products.
   • Raised concerns about hidden fees and their impact on investor returns.
6. Environmental, Social, and Governance (ESG) factors
   • Discussed the relevance of ESG factors in investment strategies.
   • Suggested integrating ESG considerations into regulatory policies.
7. Systemic risk mitigation
   • Highlighted potential sources of systemic risk and recommended mitigation measures.
   • Examined the interconnectedness of financial institutions and market participants.

Implications for investors

The IAP's report underscores several areas that warrant attention:

• Investor vulnerability: Greater focus on safeguarding vulnerable investors through tailored regulatory approaches.
• Regulatory changes: Anticipated regulatory adjustments aimed at increasing transparency and consistency.
• Recommendations: Emphasis on adopting best practices in financial literacy, technology integration and ESG considerations.

Conclusion

The work of the IAP continues to drive significant advancements in protecting retail investors. We encourage you to consider these insights in your strategic planning and regulatory compliance efforts.

Questions for consideration

• How might regulatory changes affect compliance strategies?
• What steps can be taken to enhance financial literacy within an organization?
• Are there emerging technologies or digital assets that should be integrated into investment strategies?

We recommend engaging with your legal advisor to tailor these insights to your specific circumstances and ensure adherence to the latest regulatory frameworks. Should you have any questions or require further discussion on the implications of the IAP's findings, please do not hesitate to contact any member of our Securities and Corporate Finance group.