In commenting on the Financial Services Regulatory Authority of Ontario’s (FSRA) proposed rule 2020-001, Financial Professionals Title Protection, Advocis, The Financial Advisors Association of Canada, says it strongly supports the title protection initiative, and called on FSRA to make standards higher than they are today.
“The fact that the titles are not regulated in Ontario, combined with consumers’ misplaced trust in these titles, puts Ontarians at unacceptable risk,” Advocis stated in its submission. “The proposed rule marks a major step towards addressing this untenable situation.”
In its submission, Advocis says FSRA should not recognize credentials or licenses that are based primarily on product sales. It adds that it is pleased that the regulator has specifically noted that the Life License Qualification Program is unlikely to satisfy FSRA’s competency criteria. More, they add that proceeding with a title protection regime without raising standards beyond product licensing could put consumers at greater risk.
“We do not believe that incorporating high initial proficiency standards will harm employment in the financial services sector,” Advocis stated. “Individuals who fail to achieve a recognized credential to use the restricted titles are not removed from the industry. Instead, they can simply continue to work under another title, with consumers benefiting from the clear distinction between those intermediaries that have achieved a certain level of professionalism and the right to use restricted titles from those who have not.”
A once-in-a-generation opportunity
The submission goes on to say that title protection is a once-in-a-generation opportunity to enhance consumer protection. “For other recognized professions, a sales license is not a professional credential. We submit that it should be no different for financial advisors or financial planners.”
In suggesting changes to FSRA’s proposed competency standards, Advocis urges the regulator to require that financial advisors and financial planners initially have technical education in four of six proposed categories, with plans to elevate that expectation to all six categories in the future. (Currently, FSRA is proposing that that credential holders have education in one or more of the six technical categories.) It suggests that financial planners and financial advisors be required to maintain at least $1-million errors and omissions insurance coverage. The association also says the operating costs of the title protection framework should be borne by the individuals who are subject to the framework.
Although the association supports FSRA’s position that the rule will not include any grandfathering provisions, it does call on the regulator to consider allowing approved credentialing bodies to develop temporary alternative pathways – condensed courses or challenge exams – to their credentials for those who have been in the industry for some time. Credentialing bodies, meanwhile, they say, should operate on a not-for-profit basis. “It is our position that faithfully fulfilling this mission requires a level of impartiality that cannot be achieved in a for-profit model.”
In its concluding comments, the association says “we are firmly of the view that professionalism cannot be advanced by simply enshrining a trusted title to existing practices that clearly fall short of professional standards. Restricting titles without commensurately raising standards can even exacerbate the problem, because consumers rightly expect that when a regulator or government restricts a title it is doing so with purpose, to separate professionals from the rest,” they write. “The drive to professionalism must be based on client outcomes. This is why licenses or registrations based on product sales should not qualify under the framework.”