November 7, 2007 Organization Insurance Securities

Montréal—After analyzing a preliminary report from Option consommateurs on investment representatives, the Autorité des marchés financiers (AMF) notes with disapproval how the results were presented. The actions of Option consommateurs have tarnished the reputation of all members of Quebec’s financial products and services industry and hampered the goal of informing consumers and encouraging them to acquire savings.

The preliminary report sent to the AMF on October 31 states that [translation] “We are in no way able to make generalizations about the entire industry,” and that “This small sample size obviously means that findings could not be applied to all industry stakeholders.” But Option consommateurs, in publishing these results through its partnership with Protégez-vous magazine, clearly failed to highlight distinctions and qualifications that the AMF was entitled to expect. The article suggested “rampant incompetence” in its title and stated that “the odds that you will encounter someone incompetent are 50%,” while the magazine cover added that “50% of financial advisors flunked our test.” This only succeeded in making generalizations about the entire industry.

In addition, the funding application submitted to the AMF Fund for Investor Education and the Promotion of Good Governance (“the Fund”) made no mention of a test or passing grade. Option consommateurs, in collaboration with Les Éditions Protégez-vous, arbitrarily established 65 as a passing grade in the final evaluation of its findings, leading to the conclusion that half of advisors had failed the test. This measure lacks objectivity and seems to have been taken for editorial purposes.

The AMF is further dissatisfied with the fact that Option consommateurs released preliminary results without sending it an advance copy of the final report. While the independence of project researchers and developers supported through the AMF Fund must be preserved, the AMF was entitled to expect Option consommateurs, as a Fund partner, to provide it with a final report before publishing the article in Protégez-vous and holding a press conference. The magazine’s editorial coverage of the study and the report’s unavailability precluded a certain perspective on the findings, and did not allow industry stakeholders to draw appropriate conclusions. Furthermore, the recommendations that were to be developed with the industry as per the study's initial goals will most likely be revealed only when the final report is delivered—two months after release of the preliminary results. This is inadequate and unacceptable.

The AMF wishes to stress that securities firms and representatives are subject to regulations intended to protect the public, particularly with regard to disclosure. Firms are responsible for ensuring their representatives act in the best interests of their clients. This is an opportunity for the industry to make sure that its commercial practices satisfy regulatory requirements as well as client needs. It also should be noted that the AMF and self-regulatory organizations (SROs) such as the Chambre de la sécurité financière help ensure the protection of the public through codes of professional conduct and oversight of representatives and firms. Investors are thus entitled to expect that financial service providers will comply with rules and legislation and that representatives or firms found guilty of violations will be penalized.

Finally, the AMF urges investors to become better informed about the complex world of financial products and services, select representatives carefully and seek financial product information. The AMF’s educational brochures and Information Centre are available for this purpose.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.

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