Canada's brokerage industry watchdog has signed an agreement with Ontario's insurance regulator to ensure that investment professionals who face disciplinary action by one regulator are also reviewed by the other.
The co-operation agreement between the Investment Industry Regulatory Organization of Canada and the Financial Services Commission of Ontario will address concerns that many financial advisers in Ontario are licensed to sell a variety of products, so can continue operating in one branch of financial services even when disciplined or banned by another regulator for improper behaviour.
In addition to regulating the insurance sector, FSCO also oversees loan and trust companies, credit unions, mortgage brokers and other financial industry participants. IIROC supervises people and companies that sell securities such as stocks, bonds and related investment products.
IIROC and FSCO said their memorandum of understanding means a disciplinary decision or action taken by one regulator will automatically trigger a review by the other regulator, including consideration of the "suitability" of the individual for approval or registration to work in the other sector.
The organizations also agreed to conduct joint investigations and share relevant documents when both regulators are investigating the same people.
"Investors must be protected from disciplined individuals who might seek to avoid sanctions and continue working in another part of the financial services industry," said IIROC chief executive officer Andrew Kriegler.
Brian Mills, interim CEO and superintendent of financial services in Ontario, said there used to be clearer lines between industry sectors, but they are becoming blurred as more people work across multiple areas of financial services. It means regulators must co-operate and co-ordinate their work to protect consumers, he said.
IIROC said it has signed similar accords with regulators in other provinces, including an accord signed in November with the Chambre de la sécurité financière in Quebec, which regulates people working in sectors such as insurance, mutual funds, financial planning, scholarship plans and group savings plans.