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Throughout most of Canada, no general legal framework exists to regulate the activities of individuals who offer financial planning, advice and services.Getty Images/iStockphoto

Canada's wealth management industry is asking the Ontario government for tighter regulations governing financial planners and advisers.

Earlier this year, the province launched an expert committee to review the regulations, and a number of financial industry groups have responded by asking the government to enact a general legislative framework for advisers and planners.

Currently, throughout most of Canada, no general legal framework exists to regulate the activities of individuals who offer financial planning, advice and services. That means that in every province (excluding Quebec) any individual can call himself a financial planner – regardless of certification, designation or educational background.

The absence of a legal framework has raised questions within the industry about proficiency, quality standards and potential conflicts of interest.

"We are very concerned that within the financial services industry, and within the provision of financial advice, that it has become a very confusing landscape for the average consumer," says Cary List, chief executive officer of the Financial Planning Standards Council (FPSC), which administers the Certified Financial Planner designation (CFP). "Because there is no clear regulation of titles in the industry, the average consumer assumes 'financial advisers,' 'investment advisers' and 'financial planners' are all the same, all have the same expertise and all can provide the same advice. This leaves consumers confused and at risk regarding whom to turn to."

Lynne Triffon, a fee-only registered financial planner in Vancouver with T.E. Wealth, supports the recognition of financial planning as a profession and the regulation of the use of the title of financial planner.

"There remains much confusion in the marketplace as to who are qualified financial planners and what is involved in the practice of financial planning," says Ms. Triffon, who hopes to eventually see the regulation of financial planners roll out on a national level. "Too often the terms financial planning and financial planner are co-opted by advisers for the sole purpose of selling investment or insurance products."

The Canadian Institute of Financial Planners (CIFPs) defines financial planning as "a process to provide comprehensive holistic advice dealing with an individual's overall financial and life goals on an ongoing basis."

The CIFPs' CEO, Keith Costello, says consumer protection can begin with the general public being able to differentiate financial planning from what "financial advice" can be.

"Financial advice has many forms and we refer to it as 'specific-targeted advice' and product advice," Mr. Costello says. "It is usually driven by an event and can be one-off. It is not comprehensive and does not deal with a consumer's overall financial and life needs."

The CIFPs and the FPSC were among those that sent a total of 107 written submissions to the Ontario government's expert committee last month.

"We are hoping the expert committee will recommend to the government that financial planning be seen as a distinct subsection of the entire financial industry and that it is critically important to the long-term well-being of Canadian society," Mr. List says.

The FPSC is recommending that financial planners be subject to a single set of standards so that, regardless of whom a client contacts for his financial planning needs, that individual will be a qualified financial planner who puts a client's interests ahead of all other interests and will be held accountable for the professional advice he provides.

The general public had until Sept. 20 to weigh in on the topic, and the Investment Funds Institute of Canada and the Investment Industry Association of Canada also asked the committee in a joint submission to establish common standards for individuals providing comprehensive financial plans to clients and/or using the title "financial planner."

The joint submission cautions the Ontario government against creating a framework that would make firms and individuals accountable to multiple regulators, noting that such an approach would create inefficiency, fragmentation and confusion for clients.

Instead, the associations urge the government to work with other provinces and territories to harmonize the regulation of financial planners across all Canadian jurisdictions and to ensure that any regulatory action against a financial planner or adviser within one jurisdiction will be automatically recognized by all other jurisdictions.

The FPSC, along with the Institut québécois de planification financière, has already developed a voluntary set of standards for the financial planning community that incorporates financial planning definitions, standards and competencies, and a rigorous enforcement and discipline regime.

The CIFPs is asking the government to recognize through legislation the FPSC set of standards as well as to restrict the use of the title "financial planner" to those who belong to and meet the requirements set by the FPSC.

Mr. Costello hopes that the committee's review will prompt a further examination that goes beyond financial planners and includes all retail consumer financial advice channels.

The expert committee's analysis is expected to be completed by early 2016.

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