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Financial service professionals will be held to a higher standard as the Ontario government pushes ahead with plans to crack down on people who use the title of “financial planner” or “financial adviser.”

In its latest report on title regulation, the Financial Services Regulatory Authority of Ontario (FSRA) announced that individuals who currently use either title will not be “grandfathered” from a new rule that will establish minimum standards for those who want to use those titles.

There are several reputable designations and certifications currently held by individuals in the financial services sector – including stockbrokers, financial planners, life insurance agents and many others. But Canada currently has no legislated national standard for those who offer financial planning or advice.

As a result, outside Quebec – which has its own rules – anyone can call themselves a financial planner or adviser, regardless of certification, designation or educational background.

“[There] are a large number of highly qualified individuals already operating within the financial services sector who hold industry-recognized licenses or designations,” the FSRA said in the report. “However, holding a financial services licence or designation may not automatically qualify an individual to use a financial planner or financial adviser title.”

Financial advisers generally help clients manage their investments, while financial planners help people prepare for goals such as retirement or a child’s education.

Last year, Ontario passed the Financial Professionals Title Protection Act to improve oversight on qualifications and credentials used in the financial services sector. The act requires anyone in the province who wants to use certain titles to obtain appropriate credentials and remain in good standing. At the same time, the government appointed the FSRA, Ontario’s new financial services regulator, to oversee the development of the rule and decide which industry designations would qualify under it.

Now, minimum standards for financial planners will require them to have a credential that, among other things, has an educational component related to financial planning, such as estates and tax planning, retirement planning, technical knowledge, ethical practices and dealing with conflicts of interest. A credential for a financial adviser will include similar components, as well as education on providing suitable financial and investment recommendations to clients.

The FSRA is on track to finalize the rule by 2021. The proposed rule will then be handed over to Ontario’s Finance Minister for final approval.

Consumer advocates and industry groups have raised concerns about the wide array of titles and credentials used by individuals in Ontario’s financial services marketplace, such as brokers, insurance agents, bank employees and staff at mutual fund dealers.

After six months of consultations – which were slightly delayed this past spring by the COVID-19 pandemic – the FSRA said in its report that individuals will have three years from the time the new rule is implemented to update any credential or educational requirements needed to use the title “financial adviser,” and five years for individuals who want to use “financial planner.”

If someone continues to use the designation after the transition period without obtaining approved credentials, “enforcement action” will be taken. Penalties have not yet been determined.

The FSRA’s complete list of approved designations is still under review, but the report says some existing licences or designations may not meet the new minimum requirements.

For example, the FSRA does not anticipate that the Life Licence Qualification program (LLQP) would meet standards for technical knowledge, professional skills and competencies. The LLQP is part of the Canadian licensing regime for life insurance salespeople and is held by 50,000 individuals in Ontario.

FSRA chief executive Mark White says one of the main goals is to implement the new rule “through a process with existing designations and licensing regimes so as to not create any unnecessary burden.”

One of the most widely known credentials is the certified financial planner (CFP) designation administered by the professional body FP Canada (formerly the Financial Planning Standards Council). More than 16,900 people in Canada hold it, about 9,000 of them in Ontario.

FP Canada CEO Cary List has been a part of several consultations and is optimistic his organization will be approved by the FSRA when the rule is implemented.

“We are confident that this new rule as proposed will do what is intended, which is eliminate consumer confusion around the use of certain financial titles and we are pleased to see a distinction between financial planner and financial advisers so consumers can begin to understand the difference,” Mr. List said.

The FSRA continues to hold discussions with stakeholders on which designations and certifications will be approved. The authority will post updates on its website as credentialing bodies are approved.

The list is widely anticipated by financial services professionals across Canada as other provinces have begun to explore similar measures, says Greg Pollock, CEO of Advocis, an industry lobby group for financial advisers. Last month, the Saskatchewan government followed Ontario’s lead and passed similar legislation, following consultations led by the Financial and Consumer Affairs Authority of Saskatchewan (FCAA).

“There is great interest in several other jurisdictions where we have had discussions,” Mr. Pollock said. “It is crucial that there be harmonization from province to province so we don’t have different rules in different provinces – and today we do have those differences under some licensing regimes.“

Currently, the Ontario proposal is open for a 90-day industry comment period. Questions being considered include whether advisers should be required to disclose the credential they hold to investors, whether there are any individuals who qualify for an exemption and options for consumer education.

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