Skip to main content

The Ontario Ministry of Finance has circulated a new consultation document that proposes to overhaul the province’s system of oversight for financial advisers and planners.Jupiterimages

Financial services professional groups have launched into a year-long lobby over the Ontario government's look at new oversight bodies, regulations and standards to govern financial planners and advisers.

The Ontario Ministry of Finance has circulated a new consultation document that proposes to overhaul the province's system of oversight for financial advisers and planners as investors and people saving for retirement trade in a more risky, complex financial system.

"Access to the markets is very easy now, and it's a lot more complicated from every aspect," said Keith Costello, president of the Canadian Institute of Financial Planners (CIFP), a group representing certified financial planners that is taking part in the Ontario government review. "It's become more difficult, more complicated, and the advice has become more complicated."

What's the issue?

There is no general legal framework regulating the titles and designations of people offering financial planning, advice and services, leading to many professionals calling themselves planners or advisers. The Ontario finance ministry's consultation document, released this month, said the absence of a framework raises questions about "proficiency, quality standards and potential conflicts of interest."

Ontario is looking at a range of possible changes, including a new legal standard governing conflicts of interest, licensing and registration requirements, the regulation of titles, the possibility of a new oversight body, and a central registry of financial planners and advisers.

That's creating concern among a host of groups that want to avoid additional layers of regulation. Ontario's creation of a new framework is also an important one for the Canadian industry as it may be key to setting new national standards.

"[With] every province and territory having responsibility for licensing insurance salespeople, having responsibility for licensing mutual funds salespeople, and having responsibility for licensing securities registrants, they are all slightly different," said Greg Pollock, president of Advocis, an association of Canadian financial advisers and planners. "What we see here is an opportunity to create a bit more of a common standard."

Who's affected?

The new rules could affect a range of people, including certified financial planners, mutual fund and insurance salespeople, and Charted Financial Analysts (CFA).

Advocis and CIFP are among the groups taking part in the sweeping review, as well as several other professional and licensing groups, including the Canadian CFA Societies.

Licensing bodies for the sale of mutual funds, insurance, securities and stocks are also involved. Those range from the Investment Industry Regulatory Organization of Canada, which regulates securities sales, to the Mutual Funds Dealer Association, regulating mutual funds dealers.

Who's lobbying whom?

The pressure point for the consultation is an expert committee appointed to study the issue and report back to the government next year.

Groups have until Aug. 31 to submit written comments to the committee and are expected to meet with committee members after that to answer questions and reinforce their positions.

The expert committee is chaired by Malcolm Heins, a lawyer and former head of the Law Society of Upper Canada. Members are University of Toronto law professor Anita Anand, chartered professional accountant Paul Bates and Lawrence Haber, an adviser to the Ontario Securities Commission and a former securities lawyer.

The biggest challenge?

Some of the groups disagree on whether financial planners and advisers should be regulated by a single body. The CIFP's Mr. Costello said his group wants certified financial planners carved out and regulated separately.

While proficiencies and standards should be raised across the board, Mr. Costello said, he prefers Britain's approach, where professionals are regulated by the delegated bodies they fall under and standards are set by existing securities regulators.

That would be contrary to the Quebec approach, where the government created a broader oversight body covering planners, advisers and sales representatives.

"If you try to revamp the whole system and try to create a new super body, how effective is it going to be? I'm not sure," said Mr. Costello, who, for certified financial planners, is proposing the equivalent of a lawyers' professional body with recognition through the Financial Planning Standards Council.

Mr. Pollock said he would like to see the government create a common program to oversee financial advisers, with details about proficiencies and standards established by each individual profession.

"Our sense is, if you get everyone under the same tent, that will make it easier for the public to understand," he said.

Sue Lemon, head of the CFA Society Toronto, said CFAs already have standards and governance in place, and she was happy the expert committee said it does not want to duplicate regulation.

She said the review will be a complex process given that different designations have varying educational, training and proficiency requirements.

"It's a large project," Ms. Lemon said. "They're trying to find ways to address conflicts of interest: whether there has to be a central registry, whether the education, training, proficiency and ethics has to be standardized and enforced in some way."

What's next?

Lobbyists said they are optimistic that the expert committee will make its recommendations to the government in early 2016, with the government's decision released in the spring, possibly in the 2016 budget. Implementing legislation could be introduced soon after.

Simon Doyle covers lobbying and the intersection of business and politics in Ottawa.

Editor's note: an earlier version of this story gave an incorrect explanation for the acronym CFA. It stands for Chartered Financial Analyst. This version has been corrected.

Interact with The Globe