An Ontario provincial MPP has tabled legislation to create a new regulator to license financial advisers in the province, saying it will ensure there are consistent standards across all investment sectors.
Rick Bartolucci, a Liberal MPP from Sudbury, introduced a private member’s bill Tuesday at Queen’s Park to create a new regime to regulate financial advisers, arguing the present “mishmash” of licensing rules has too many gaps.
“The current system includes a series of disconnected rules that evolved over time and fall under various government ministries,” Mr. Bartolucci said. “While well intended, the status quo is a mishmash of policies that can allow unscrupulous financial advisers to slip through the cracks.”
As a private member’s bill, the legislation faces an uphill battle to be adopted because it is was not tabled as government legislation. But Mr. Bartolucci noted he has succeeded in winning support for two bills in the past, including one permitting highway bridges to be named after police officers who have died in the line of duty.
The proposed bill would create a new agency to administer the licensing system for financial advisers, with powers to investigate complaints and the ability to impose financial penalties on those who act improperly. It would also create proficiency standards and a code of ethics for advisers.
The legislation was championed by the Financial Advisors Association of Canada (Advocis), which represents 11,000 financial advisers across Canada and has been lobbying for consistent regulation of the industry.
Advocis chief executive officer Greg Pollock said people who dispense financial advice in different parts of the investing industry are governed by different rules, and some people are not covered at all if they give general advice on products that don’t require them to be licensed, such as group pensions or group health benefits.
“Anyone can hold themselves out as a financial adviser here in Ontario,” he said in an interview Tuesday. “So if I don’t like what I’m doing today, I’ll call myself a financial adviser or a financial planner tomorrow. We see those as gaps in the system and we think it would be better for both consumers and financial advisers if people knew who they were dealing with when they have that financial adviser across the table.”
Advocis alleges the current system also allows “sector hopping” in which advisers seek registration to sell a different product when they have been banned by a regulator in another area.
Over 100,000 financial advisers in Canada are already registered with either Canada’s brokerage industry regulator or the mutual fund industry regulator, and tens of thousands more are also registered as insurance agents with various provincial insurance industry regulators.
The new legislation would not replace those registration requirements and would add an additional licensing requirement with the new body.
The Investment Industry Association of Canada, an industry group representing brokerage firms, said its member employees already have stringent proficiency requirements as members of the Investment Industry Regulatory Organization of Canada (IIROC), including “rigorous entrance requirements, training and ongoing continuing education.”
IIROC members don’t need another tier of licensing requirements, said IIAC vice-president Michelle Alexander, but there is a need for more supervision of financial planners who are currently unregistered.
“We fully endorse a regulatory approach that does not add unnecessary or duplicate administrative burdens for entities and professionals ... already subject to supervision,” she said.
Mr. Pollock said he would prefer if the new system could be harmonized over time with existing regulators so advisers would have to be registered with only one organization.