Train the next generation in legal compliance

This structure has the mandate, in addition to research, to provide ongoing training to the next generation in charge of compliance in institutions and in specialized law firms.

While the number of services offered by the industry is increasing, some firms have seen their compliance departments triple in size in recent years, says the director.

“Compliance successors in these organizations must have a 360-degree view of financial services law. It must know not only the legal framework, but also the structure of the industry and the profile of the consumers of its services,” notes Cinthia Duclos.

Issues in management

Several changes in the ecosystem are testing the limits of the current legal framework, according to the law professor. Here are a few :

  • Securities and insurance

The rapprochement between transferable securities and insurance in terms of investment services has highlighted certain disparities in the framework. This would benefit from being harmonized. “The fact that the products are not regulated in the same way in these two sectors leaves differences in crucial aspects of the protection of savers”, specifies Cinthia Duclos.

Fintechs and products such as cryptoassets are testing the limits of the current legal framework. What to do, for example, with cryptocurrency sellers who access the Quebec market via the Web and who are not supervised by the Autorité des marchés financiers (AMF)? “The AMF cannot become the Internet police and unmask all fraudsters,” replies Cinthia Duclos. She is of the opinion that on this aspect, the legal framework is not the only answer. She believes that there should be other types of tools (training, awareness, etc.) to help savers avoid the schemes of fraudsters.

Eco-responsible investment is another subject for which the regulatory framework is imperfect, believes the lawyer. Climate change and the enthusiasm for ESG investments (which meet environmental, social and governance criteria) are raising concerns. Do individual savers and institutional investors have access to all the information they need on eco-responsible investment funds? This is a question that deserves to be studied, considers Cinthia Duclos.

  • Insurance and climate change

Do insurers adequately protect customers in the event of natural disasters, such as floods or tornadoes caused by climate change? Examples of class actions by citizens against insurance companies following such damages suggest that we could do better in this area.

  • Influencers and Advisors

The supervision of “influencers”, these people not registered with the Chamber of Financial Security who give financial advice on social networks and on the Web, worries the industry. Many councilors see it as an illegal exercise of their profession. “There is a stake in knowing how independent investors are influenced by the advice given by influencers,” says Cinthia Duclos.

“Current legal tools such as the Securities Law and Regulation 31-103 of the AMF on registration requirements and exemptions allow individuals to be sanctioned in certain cases, but depending on where they exercise their activity. »

  • Aging of the population

Those 85 and older are the fastest growing portion of the country’s population, according to Statistics Canada. Financial institutions will therefore have to deal with an increasing number of elderly customers over the next few years.

This demographic reality should lead to increased vigilance to protect these savers, who are less adept at using digital technologies and may suffer from physical and cognitive limitations. “Institutions must keep in mind the sensitivity of people who need special support and continue to offer them a service in person,” emphasizes the director.

The influence of the Norbourg trial

Originally from Beauce, Cinthia Duclos studied human sciences before turning to law. It was at CEGEP that she was oriented towards the profession of lawyer, she who saw herself more in teaching. “I dreamed of a profession that would help me change the world. I quickly felt on my X in the field of law. »

After obtaining a law degree and a master’s degree in business administration from Laval University, Cinthia Duclos worked for a few months as a business law lawyer at Davies in Montreal. Family circumstances led her to return to settle in Quebec, where she turned to her alma mater to undertake a doctorate in financial services law.

As part of a university research project on fraud in the Norbourg affair, she attended the trial of Vincent Lacroix. This experience will be decisive for the rest of his career. “Experiencing this trial in real time and seeing the evidence provided really made me aware of the need to protect savers against fraud,” she says.

Thousands of investors were robbed during this $130 million financial fraud perpetrated in the mid-2000s by President de Norbourg and his accomplices.

The role of institutional leaders

Cinthia Duclos’ doctoral thesis, published in 2021, precisely studies the impact of organizational failures in financial companies on the behavior of advisers.

It applies to the financial services industry the model swiss cheese (Swiss cheese model), used in risk management to analyze the safety mechanisms put in place to avoid unforeseen events or major accidents, such as plane crashes. This approach aims to understand how a cascade of facts and decisions in a financial organization can cause harm to savers.

“Financial business leaders wear two hats. They run a business with business goals while mentoring representatives who provide professional service. In their decision-making, they are sometimes confronted with competing interests, for example when advisers are encouraged to sell products that have higher commission costs”, gives as an example Cinthia Duclos.

Preparing for succession

The one who has been teaching business corporation law at the Faculty of Law of Laval University since 2013 was appointed in 2020 co-director of the Research Group in Financial Services Law (GRDSF), to which the newly created laboratory reports.

As such, it considers its mission to be:

  • to help prepare a qualified succession in financial services law,
  • to fuel discussions on the legal framework and governance practices in the industry,
  • and promote consumer protection.

These subjects will also be on the program of the colloquium on the protection of investors in the securities and personal insurance sector which will be presented on October 28. As part of this day, the speakers will examine the general framework as well as certain preventive measures applicable to financial intermediaries. Discussions will also focus on assistance and compensation for savers who are dissatisfied or who feel wronged.

There is no shortage of issues to fuel discussions between education, research and industry in order to guarantee savers and investors protection that responds to current and future changes.

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