The Ontario government is moving to restrict the use of financial planning titles, but has shied away from making any definite decisions yet on whether to institute a statutory best interest in the province.
Ontario Finance Minister Charles Sousa told a financial advice conference in Toronto in March that the province will work with regulators to restrict the use of financial planning titles as well as bring in minimum proficiency standards for financial planners and advisors to better serve investors and encourage greater industry integrity.
Sousa’s comments follow recommendations contained in a recently released report that noted the lack of consistency in titles by those in the financial planning industry, as well as a lack of harmonized regulations.
Reform is required
“It was made abundantly clear to us during the course of our research and consultation that reform is required to the current fragmented framework for regulating financial services in Ontario,” states the Expert Committee report. “Our recommendations are intended to reduce confusion and allow Ontario consumers to better identify qualified individuals who can help them meet their financial goals.”
Sousa said the government will use the report’s recommendations “to improve the quality of information available to those making decisions essential to [investors’] long-term, financial well-being. These recommendations come at a time when the regulatory landscape is changing in Ontario for the better.”
The Financial Planning Standards Council (FPSC) is a long-time advocate of restricting the title of “financial planners” to only those who are qualified and overseen by a professional body. In a statement, FPSC said it appreciated that Sousa was in favour of the Expert Committee recommendation.
Paul Bourque, president and CEO of The Investment Funds Institute of Canada (IFIC), said bringing in these regulations will help protect investors. They will also “remove a serious loophole” and give investors greater certainty that their financial planner or advisor is licensed, Bourque said.
The Expert Committee report also recommended that Ontario move forward on instituting a best interest standard in the province for those that provide financial planning or financial advice.
But unlike the titles issue, Sousa made no definite statement on instituting a best interest standard in the province. Instead, he said the government will rely on comments in the Expert Committee report and the outcome of consultations currently taking place with the Canadian Securities Administrators (CSA).
Provincial regulators are split on whether to implement a best interest standard. Only Ontario and New Brunswick have come out in favour.
Collecting fines
On the enforcement side, Sousa said the government is also proposing legislative changes that will allow self-regulatory organizations (SROs) to collect fines levied against individuals.
The finance minister said taking this step will help deter potential offenders from wrongdoing and strengthen investor protection.
The move was welcomed by the Investment Industry Regulatory Organization (IIROC).
“As a public interest regulator, this new enforcement tool will enable us to provide stronger protection to the investing public and collect fines from wrongdoers who have previously evaded paying the penalty for their misconduct,” said IIROC president and CEO Andrew Kriegler.
Nearly $32 million in unpaid fines to IIROC have been racked up since 2008, with almost $20 million of that stemming from just Ontario. The advisor fines deal with everything from misappropriating client funds to endorsing the signatures of clients, many of them seniors.
