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The Mutual Fund Dealers Association of Canada is looking at developing a continuing education requirement that could affect more than 81,000 registered representatives.

Financial advisers licensed to sell mutual funds could find themselves back in the classroom as regulators explore a new continuing education requirement.

The Mutual Fund Dealers Association of Canada (MFDA) is looking at developing a continuing education (CE) requirement that could affect more than 81,000 registered representatives at approximately 111 dealer firms.

Many industry professionals, such as lawyers and accountants, must complete CE requirements to maintain a high standard of professionalism and keep industry knowledge current. But mutual fund-licensed financial advisers do not have CE requirements to maintain their licence.

The gap is a surprising one, as the majority of financial industry professional licences and designations uphold educational standards through CE mandates. In comparison, advisers who are licensed by the Investment Industry Regulatory Organization of Canada to sell securities must complete 42 hours of CE credits over a three-year cycle. Insurance advisers who hold the Chartered Life Underwriter (CLU) designation must complete 30 hours of CE requirements every year, while the Canadian Association of Accredited Mortgage Professionals requires 12 hours of CE.

The absence of CE requirements was quickly recognized by the MFDA when it entered the industry in 1998, but the problem wasn't seriously looked at until last summer when the MFDA sent out its annual questionnaire to members. The MFDA asked members for feedback on the type of in-house training programs they offer to financial advisers.

"Initially these advisers were not part of a self-regulatory organization and the distribution of mutual funds has tended to be viewed as a lower-risk business than the securities business," says Karen McGuinness, senior vice-president of member regulation and compliance at the MFDA. "When the MFDA was first recognized, this was first brought up in discussions, but in terms of priorities we had to focus on suitability, knowing your client standards and supervisory systems. We feel we have raised the bar in regulation within our membership and now is the time to focus on continuing education."

While the majority of the industry supports the proposal, there is concern around the duplication of CE requirements with other designations. Mutual fund advisers who currently hold a certified financial planning (CFP) designation or a CLU will already be completing certain credits and may have similar requirements from the MFDA.

"We hope the MFDA will come in and complement the other industry designations, and not have duplication within the industry," says George Aguiar, president and chief executive officer of GP Wealth Management. "I think optically for this industry it will raise the bar, and certainly the response has been positive from our advisers, but they want to make sure it is not going to be burdensome."

The MFDA has released a discussion paper that includes looking at the issue of duplication. Other considerations being taken into account before implementing the new initiative include: the CE requirement should not be cost prohibitive; it should be feasible administratively; and the content should address ethical practices, compliance standards and professional development.

There is also the question of how many hours of CE will be required for each representative, and how frequently they will have to complete credits.

"Not all dealers have the same business model, so I am sure the position on CE requirements will vary accordingly," says Nelson Cheng, CEO of Sterling Mutuals Inc., who oversees 300 mutual fund-licensed reps.

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