Title protection: Regulator to focus on education over enforcement in first year

The Financial Services Regulatory Authority of Ontario (FSRA) says it does not wish to see those who are legitimately trying to do business with the public to be disrupted in their approach to building a market, but at the same time, the regulator adds that everyone using the financial planner (FP) or financial advisor (FA) titles in Ontario must respect the rules, and work to obtain an appropriate credential to support that title’s usage going forward.

The comments were part of FSRA’s webinar, the financial professionals title protection framework webinar, held online on April 21.

Those who’ve used the FP or FA titles prior to January 1, 2020 may continue to do so, but have two years from the Financial Professionals Title Protection Act, 2019 implementation date on March 28, 2022 to obtain an appropriate credential or designation to use the FA title or four years to complete the requisite training to obtain the credentials needed to use the FP title. Those who continue to use the FP and FA titles, but who were not using them before January 1, 2020, will be asked to cease using those titles if they are the subject of a complaint.

Under the new rules, FSRA will approve and oversee credentialling bodies who themselves will in turn be responsible for overseeing the conduct of title users – FSRA does not have direct authority over the conduct of individual title users.

“We have the ability to issue compliance orders against people who are using the titles without being properly credentialed, but that is really the extent of our ability to take action against individual title users,” says Joel Gorlick, market conduct policy director. “If we receive a complaint about someone who is using a title without having an approved credential, FSRA does have the authority to issue a compliance order against that individual but other than that we do not have direct authority over the conduct of individual title users,” he adds. “Title users would need to abide by a code of conduct set out by the credentialling body.” 

The Act establishes minimum educational requirements for those who want to use the FP and FA titles when doing business in Ontario. It includes the expectation that credential holders will put their client’s interests first, that they will be actively supervised, and be subject to a complaint and disciplinary process when needed.

FSRA says it is currently focused on approving credentialling bodies and helping those already approved to implement the regimes needed to abide by the framework. With respect to non-compliant title users, they say FSRA will respond to complaints and focus on educating consumers during the transition period.

As credentialling bodies are approved, FSRA also intends to develop a public registry of credential holders, the creation of which they say is currently underway and will take some time to develop. 

Presently the only two credentialling bodies approved are FP Canada and the Institute for Advanced Financial Education (IAFE), a subsidiary of Advocis. To date, FSRA adds that they have not received any applications from the industry’s self-regulatory organizations to become credentialling bodies. Similarly, organizations representing other professions which also work in financial planning – lawyers and accountants who might also be using the regulated titles – have not at this point applied to be credentialling bodies either. FSRA representatives point out that the framework does not prohibit the activity itself, just the title usage related to planning and advisory activities.

For those holding the Life License Qualification Program (LLQP) designation, meanwhile, they also say they are looking at potentially developing a “top up” credential that will allow LLQP designation holders to call themselves a financial advisor, but did not elaborate on the timeframe for that development.

For those who have designations that are not yet approved, they say those professionals have the option to keep checking back as more credentialling bodies are approved. Ultimately though, they add that everyone in this situation will need to decide if they want to undertake to get an approved credential.

“It is the title users’ obligation to monitor whether they already have an approved credential and are in good standing with that approved credentialling body. Failure to do so may result in (FSRA) asking (them) to cease the use of that title,” says Wendy Horrobin, FSRA’s head of licensing and risk assessment. “We intend to run the sort of holding out provisions in the same way that we do with our other sectors.” 

More approved credentialling bodies are expected to be announced by the regulator in the coming weeks.