CRTC makes financial advisors subject to telemarketing rulesBy Alain Thériault | September 25 2010 08:20PM
The Canadian Radio-television and Telecommunications Commission's (CRTC) recent decision to make investment and financial advisors subject to telemarketing regulations has raised the ire of a number of advisors and associations.
The CRTC has ruled that investment and financial advisors are no longer exempt as far as telemarketing regulations are concerned. The commission concluded that the rules governing unsolicited telecommunication apply to the investment industry, as was already the case for the insurance industry.
From now on, the regulations will treat all unsolicited phone calls from members of these two industries to their clients as telemarketing calls and therefore they will be subject to the Do Not Call List (DNCL) rules. This applies to both sales as well as to the promotion of products or services. However, advisors may still communicate with existing clients who are on the DNCL if it they have an ongoing business relationship.
This about-face surprised the industry. Advocis, The Financial Advisors Association of Canada, says that taking away the exemption enjoyed by financial advisors is not in the public interest. CEO Greg Pollock says that the reinterpretation of the rules is a blow to advisors and clients alike, and suggests that it treats financial services professionals as little more than window washers.
Mr. Pollock is upset that the CRTC would make such a ruling without even demonstrating that the exemption was harming consumers in some way. He is particularly concerned about restrictions that will force advisors to telephone clients between specific hours, without taking time zones into account. As a result, an advisor in Toronto would not be permitted to contact a client in Vancouver about a drop in the Toronto stock market until it was 9 a.m. in British Columbia.
The CRTC's change was made after the insurance industry petitioned to have the same exemption that had been previously granted to investment and financial advisors extended to their own relationships. The result was that the CRTC agreed that both groups should be operating on the same playing field but instead of expanding the exemption, it revoked it for the investment industry.
"Everyone was completely surprised when they got rid of the whole exemption. We just didn't see it coming," says Susan Copland, Director at the Investment Industry Association of Canada (IIAC).
Besides the associations, there was strong reaction to the decision from individual participants of For Advisors Only (FAO), an online discussion group. One member wondered if errors and omissions insurers would still protect advisors if they were prevented from helping a client because of the CRTC rules. Another FAO participant, expressed concerns about having to write to clients yet another time in order to obtain their permission to stay in touch by telephone. Several other discussion list members called for political action.
FAO member Harley Lockart, who is also a member of Advocis' board of directors, encouraged advisors to support Advocis in its lobbying efforts, while David Barber, Vice President, Insurance of The Independent Financial Brokers, recommended that advisors telephone their Members of Parliament.
The CRTC says it was simply being responsive. "This was a request from the industry. We found that the competitive issue had not been dealt with and a level playing field would not be present in the marketplace. That's something we concern ourselves with," says Chief Telecommunications Enforcement Officer, Andrea Rosen.
Certain calls are exempt from the DNCL rules. These include: calls to a consumer who has an existing business relationship with the organization; calls to a consumer who has given express consent to be called; calls to business consumers.
If an advisor's calls don't already fall into one of these exempt categories, they must follow the DNCL rules.