The Ontario government wants stricter regulations for financial planners in the province, including increased oversight of qualifications and training for advisers.
Finance Minister Vic Fedeli says the government wants to ensure “consumer confidence in financial advice,” citing the lack of regulations in the wealth management industry for financial planners and advisers. Of chief concern, he says, is the financial illiteracy of many investors, putting consumers at risk of receiving guidance from inadequately trained professionals.
The vast majority of Canadians do not have a detailed financial plan for retirement. Despite new rules that require more transparency around investment fees and performance, consumer complaints about investments have not declined, according to the most recent report from the Ombudsman for Banking Services and Investments. The top grievances include complaints about equities, mutual funds, suitability of investment products and fee disclosure, the OBSI says.
Outside Quebec, which operates under a different set of rules, anyone in Canada can call themselves a financial planner – regardless of certification, designation or educational background.
“In Ontario today, there is no consistent regulatory oversight in financial advisers and planners, and for this reason investors and families are currently at risk of receiving financial advice and planning services from individuals who may not be appropriately trained or qualified to help them save for the future,” Mr. Fedeli said during a keynote speech to financial advisers this week.
Part of Ontario’s plan is to introduce financial literacy bills over the next four years, he added. Among them, he would like to see Grade 10 students complete a financial literacy class: “Not only should it be mandatory, but you cannot graduate high school without it."
The government first addressed the issue of credentials last week in its fall economic statement, saying it would "review measures to ensure that families can be confident in their choice of financial planner or adviser, knowing they are dealing with someone who has received appropriate training and is subject to regulatory oversight. "
Ontario’s previous, Liberal government released a consultation paper last March, before their electoral defeat in June, to develop regulations for financial planners. It proposed to restrict the use of the title “financial planner” to individuals with a recognized financial planning credential. It also proposed creating a public database of all financial planners in the province.
One of the most commonly known credentials is the certified financial planner designation administered by the Financial Planning Standards Council (FPSC). It is currently held by more than 16,500 individuals in Canada – about 9,000 of them in Ontario.
When asked by The Globe and Mail on Wednesday if the previous government’s consultation paper was part of the new review, Mr. Fedeli’s office declined to comment.
Mr. Fedeli’s vow to boost oversight of financial planners comes in the wake of his decision earlier this fall to interfere in a national review of mutual fund fees. The review, which remains in limbo, had proposed to ban early-withdrawal fees, which are often hidden from consumers.