Title regulation is not a new idea, say proponents of the new regulatory framework being developed in Ontario to govern the use of advisory titles being used in the industry today.  

“All of us have had the experience of walking in to seek the advice of a professional and their title conveys, in a very succinct way, what the professional does, what they know, what they do and how they are accountable,” says Huston Loke, executive vice president, market conduct, with the Financial Services Regulatory Authority of Ontario (FSRA). “We are working on a regime where individuals will be required to obtain an approved credential in order to use the titles, financial advisor (FA) and financial planner (FP). There is no regulatory framework for the use of these titles currently.” 

Loke provided a great deal of insight into the regulator’s position on titling as part of a panel convened to discuss how title protection will work and what the implications are for advisors and their clients, at the annual Advocis regulatory symposium in November. 

Held virtually this year, the symposium’s session covering Ontario’s new title protection rules set forth in proposed rule [2020-001] Financial Professionals Title Protection under the Financial Professionals Title Protection Act, 2019, also included commentary from Advocis’ president and CEO, Greg Pollock, and CanAge president and CEO, Laura Tamblyn-Watts. The group discussed existing and proposed standards and even took the opportunity to advocate for standards above and beyond what FSRA is already proposing. Grandfathering and proposed transition periods were also discussed for the benefit of those gathered to listen to the virtual presentation.  

Balancing benefits and costs 

“We want to leverage existing standards, leverage existing programs that may be out there in the marketplace, so that there is an appropriate balance between the benefits that customers will receive and the cost that will be borne by market participants,” Loke says.  

In FSRA’s consultation with stakeholders, he adds that there was a great deal of consensus about the role and activities a financial planner might undertake, but not as much consensus about the financial advisor’s range of activities. “It is important to note that we are not going to be restricting the scope of activities; professionals can continue to carry those out,” he told symposium attendees.  

“We do not want to put them out of business,” Pollock clarified later in the session, referring to those who are working in the business but who likely do not have the credentials necessary to make use of the FP or FA titles. “We want them to continue doing business, it is just that they would be restricted in terms of the title they use.” 

Competency profile for financial planners 

While development of the competency profile for financial planners is headed in a good direction, he adds, Pollock says the proposed FA competency profile falls short.  (The proposed rule lists six areas of technical knowledge where a financial planner must be proficient.  For those using the FA title, the proposed framework only requires proficiency in one of the six technical knowledge categories.)  

“We are talking here about financial advisors. We are not talking about product sales people. There might be people out there today that hold out as financial advisors but their focus is product sales. That is what they do,” he adds. “Those folks are out of scope with it comes to using the title, financial advisor. At least that is our view.” 

Although some have argued in their submissions to FSRA that those already governed by a self-regulatory organization should be exempt from the proposed rules, Pollock further argues that those only licensed under the Mutual Fund Dealers Association of Canada (MFDA), for example, should not be allowed to hold out as a financial advisor. “Practice management, ethical standards, compliance knowledge, those areas are not generally part of the MFDA licensing program. In our view, that would not qualify one to be a financial advisor.” 

In its consultation, FSRA says the proposed rule does not include any exemptions from the Act but the regulator did specifically seek comments from industry stakeholders about whether the framework should allow any exemptions. (The comment period on the proposed rule expired November 12, 2020.)  

LLQP falls short 

While the consultation documents speak generically about the credentials an advisor or planner might have, meanwhile, it goes out of its way to single out the Life License Qualification Program (LLQP), saying the license likely does not meet the minimum standard for technical knowledge, professional skills and competencies for FP or FA title use.  

“We are creating something that will convey a certain meaning to the marketplace. We have established what we think the competency profiles should look like,” Loke says. “We would certainly agree that the LLQP has very strong content, especially on the product side, it covers a huge range of options. However, we think there are some shortfalls in terms of matching up with the standard that we are trying to achieve for financial advisor title usage.” 

In a separate session at the symposium, Canada Life’s Ali Ghiassi, vice president of industry affairs and government relations defended the LLQP, spelling out some of the competencies LLQP licensees need to possess in order to be licensed. “We believe there needs to be a level of credit given to those who have an LLQP license,” he says, adding that if there are gaps to be filled, “I think we will certainly be open to discussions about how we can do that, particularly given the fact that people with a life license are required to fulfill continuing education as part of their ongoing licensing requirements.” 

No grandfathering exceptions 

Those who inquired about whether years of experience would be recognized under the new framework, were also disappointed. Loke told the symposium that while FSRA was looking at allowing three and five year transition periods – those using FP and FA titles could continue doing so during the transition period while they work on acquiring a recognized credential – but there would be no grandfathering exceptions to the rule, as it is written today, not even for lawyers, accountants or other professionals who practice financial planning.  

“Once the framework has been fully rolled out, the individuals who hold themselves out to be financial advisors or financial planners will have to be credentialed by a credentialing body,” he says. “We do want to professionalize the industry. Those that hold themselves as financial advisors or financial planners will need to obtain a required credential in order to meet our objectives.” 

In its request for comment on the proposed rule, FSRA noted that consumer and investor advocates did not support the concept of exemptions for either title. Industry, consumer and investor advocates also did not support grandfathering for either title.  

“When we are talking about consumer protection it is going to feel a little uncomfortable and I think we are just going to have to be okay with that as a profession,” says Tamblyn-Watts. “It is going to mean that people who have been working in the field are going to have to get certifications (credentials).”