The recent adoption of Bill 30 in Quebec will have a profound impact on the accountability status of actuaries and investment managers, according to Robert Pouliot, vice-president of the Centre for Fiduciary Excellence.
He says it will put an end to the legal capping of their liabilities and by making them fully liable on fiduciary risks.
“It was common practice for the actuarial advisors to cap their legal responsibility. This is no longer admissible,” Pouliot explains. “It’s really up to the investment manager to meet the expectations or take the means to meet the expectations of the client here.”
Now that legal responsibilities aren’t allowed to be capped, he thinks insurance premiums could go higher.
“The problem of insurance premiums here is that there are only two major players providing directors and officers(D&O)liability insurance together with professional indemnity insurance,” says Pouliot. “And obviously, they tend to increase their premiums because there’s no more liability cap.”
He also believes Bill 30 could also have an impact on the rest of Canada. For example, if an Ontario investment manager serves a Quebec pension plan, all of their offices will have to comply across Canada. Gradually, that fiduciary responsibility of investment managers might spread across Canada quite easily.
“But eventually this is what will happen and I think the pressure of the market is going in that direction: making investment professionals—whether it’s the investment manager, the actuarial advisors, or the investment consultants—really more accountable towards the ultimate investors,” says Pouliot.
To read What Bill 30 means for plan sponsors, which includes a primer on the bill, click here.
To comment on this story email craig.sebastiano@rci.rogers.com.