Opinion: The OSC’s priorities have shifted

The Ontario Securities Commission’s (OSC) 2026 examination priorities, published last month, confess a quiet but consequential shift away from the retail investor and toward the machinery of the market. They tell you what an agency intends to pursue and, by omission, what it has decided to leave alone.

Start with what has disappeared.

Last year, the OSC’s Registration, Inspections and Examinations Division identified two retail-facing reviews as priorities.

One was a joint examination with the Canadian Investment Regulatory Organization (CIRO) into high-pressure sales practices in bank branches, launched after public reports that bank-employed representatives were pushing mutual funds on customers who did not need them or were unsuitable.

The other concerned exempt market dealers distributing securities of issuers that had failed to meet their reporting obligations — a corner of the market where ordinary investors can be exposed to risks they may not understand.

The bank-branch review produced clear evidence and should have produced a sharp response.

In July 2025, the OSC and CIRO published their findings. They were damning. Across nearly 3,000 representatives at the mutual fund dealing arms of the five largest bank-affiliated dealers, one in four said clients were being recommended products or services not in their interest at least “sometimes.”

Forty per cent said sales scorecards influenced recommendations. One in three said clients had been given incorrect information about the products recommended to them.

This was not a vague cultural concern. It was documented evidence of conflicted advice at scale, inside the institutions most Canadians trust with their savings.

Then the regulator blinked. Its stated next step was to understand the sales practices and the controls dealers use to manage conflicts — in plainer terms, to have the banks examine the systems that produced the problem.

Nearly a year later, the 2026 priorities say nothing about what comes next. No targeted enforcement priority. No announced compensation review. No commitment to test whether sales targets and scorecards are still shaping recommendations. The issue has faded from view at exactly the stage where silence benefits the industry most.

Little protection

The same pattern appears, less dramatically, in the exempt market. The OSC’s 2025 plan to scrutinize dealers selling securities of issuers already in default went to a recurring retail problem: products sold outside the prospectus system, to investors who may not grasp how little protection they have. In the 2026 priorities, that work is no longer named.

Perhaps the OSC is still pursuing it through ordinary supervision. If so, it should say so. If not, the message is worse: a retail-risk file can be identified one year and vanish the next without any public account of what was found or whether the risk has been contained.

Where did the attention move? To plumbing and paperwork.

The 2026 priorities emphasize compliance examinations of exchanges and clearing agencies; derivatives business-conduct rules; participation-fee and excess-working-capital filings; and separately managed accounts. All are legitimate supervisory work. None answers the question raised by the OSC’s own findings: what happens when large, trusted institutions place sales pressure between the investor and the advice?

The one new retail-facing item — a national sweep of marketing practices — arrives with its outcome seemingly predetermined. The notice says the sweep will assess marketing practices and then consider whether updated industry guidance is necessary.

Guidance is not a remedy. It is what regulators issue when they want to be seen responding without deciding to act. Investors do not need another pamphlet explaining what firms already know.

The deeper signal lies in the OSC’s definition of risk. The 2026 notice says the division will emphasize “high-impact” firms — those with considerable assets under management, whose operational failure could create systemic risk. That is a prudential lens, borrowed from banking regulation, concerned with the stability of the system.

Investor protection is different. It asks whether the person across from a representative is treated fairly, given suitable advice and shielded from conflicts the firm has an incentive to normalize. Systemic risk is about protecting the market. Investor protection is about protecting the person inside it. The 2026 priorities lean toward the former.

Layered over this is the familiar language of efficiency, proportionality and AI. But efficiency is usually the language regulators adopt when mandates expand faster than resources. It is not the language of an agency spoiling for a fight on behalf of investors.

None of this is a scandal. There is no dramatic abdication and no visible capture. That is what makes it effective. The retreat is procedural, buried in a routine staff notice, visible through what is no longer named rather than anything openly abandoned.

The OSC’s mandate begins with protecting investors from unfair, improper and fraudulent practices. Its own work identified a serious retail-investor problem in the country’s most trusted financial institutions. Its new priorities suggest an agency more comfortable supervising the system than confronting the firms inside it.

Investors are entitled to ask the question the notice avoids: You found the harm. What are you going to do about it?