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Governments could intervene if financial planning industry fails to self regulate

By Susan Yellin | April 23 2014 10:00AM

If the financial planning industry across Canada does not move on regulating itself, there is no doubt governments will step in and do it for them, with the inevitable result that decisions will be made for financial planners by those not in the industry, a panel in Toronto was told.“In the absence of a profession standing up for the sake of the public good, the government has to regulate it,” said John Wilkinson, president and CEO of Wilkinson Insight Inc. The only alternative is to self-regulate, said Wilkinson, the first Certified Financial Planner (CFP) to become a member of the Ontario legislature, where he served from 2003 to 2011. “You are going to have to prove to the government that in the public interest, [the industry] can do a better job. I think that is crucial for the future of financial services because without that, there will be more and more regulation, not less.”

Both Wilkinson and Cary List, president and CEO of the Financial Planning Standards Council (FPSC), said financial planners make up one of the few professions that is not self-regulated, noting that doctors, lawyers and accountants have their own self-regulatory organizations (SROs) that maintain standards of practice, investigate complaints and discipline their own members.

List said there are many different licensing bodies across the country looking after the needs of the securities, mutual funds and insurance industries, but not one holistic regime that covers all of those who provide advice. That means that there are no restrictions or requirements in most of Canada as to who can call themselves a financial planner. “I think that’s where the real vulnerability is,” said List. “The fact is that consumers don’t see the world in silos.”

Currently, Quebec is the only province that regulates financial planners.

At the same time, List, who along with other financial planning groups wants to see the CFP designation as the gold standard in the industry, said he doesn’t want to start from scratch. “Let’s not create four different sets of standards for financial planners. Let’s not turn this into a big deal trying to wipe out what is already out there in terms of standards and reinvent the wheel.”

However, until there is one set standard, List said he would like to see individual firms tighten up their own use of titles and designations and regulators get more aggressive on companies that don’t follow those rules.

Greg Pollock, president and CEO of Advocis, who did not speak at the panel but did attend the meeting, said the problem here is that there are a number of insurance and other financial advisors without their CFPs who create complex needs analyses for their clients that require many of the principles of financial planning. He did agree that only advisors should regulate advisors.

In the meantime, a proposed private member’s bill aimed at regulating all financial advisors in Ontario passed its second reading in the provincial legislature and will now go through the Standing Committee on Finance and Economic Affairs for review.

The bill was brought in by Liberal Rick Bartolucci in February. Among other things, the bill would create an SRO, provide for a code of ethics and establish discipline and appeals committees to determine registrants who fail to comply with the code.

Pollock said the bill stems from an Advocis consultation paper but does not exactly follow the Advocis model, which he said would recognize existing bodies to oversee the profession rather than creating a new SRO.

New program

FPSC is launching a new program beginning July 1 to help those who are working towards their CFP designations.

The program, called the FPSC Level 1 Certification in Financial Planning, is aimed at those with limited or no professional financial planning qualifications but who provide financial planning strategies to clients with less complex financial planning solutions.

As of July 1, 2014, the new course will replace the FPSC Registered Candidate program on the current path to CFP certification.

At the same time, FPSC will introduce new “Routes to CFP Certification” that will offer exemptions for those who already hold certain financial planning or professional qualifications. The organization says the exemptions will streamline the path to CFP certification.

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