Special Feature

Advocis Regulatory Affairs Symposium 2016

An SRO for advisors, increased regulation for insurance advisors, warnings on limiting access to financial advice, and more from the Advocis Regulatory Affairs Symposium in Toronto. Photo copyright: elen1/123RF.

Industry News

Although the provinces have not moved yet on the effort to see the creation of an SRO for advisors, clients could help tip the scale in that direction, experts say

By Tessie Sanci |

The Financial Advisors Association of Canada's (Advocis) long-standing desire to see financial advisors regulate themselves, as doctors and accountants do, will only be taken seriously if clients speak out about their need to see greater professionalism and high standards in the financial advisory business, said John Wilkinson, a former financial advisor and politician, during a panel discussion at the Advocis Regulatory Affairs Symposium in Toronto on Monday.

"When consumers go to politicians and say they want something that's better and protects them, that's what [politicians] listen to," said Wilkinson, who was an advisor for 20 years before becoming a member of provincial Parliament in Ontario in 2003 and leaving politics in 2011. "It's not enough for us [in financial services] to be drinking our bathwater and then try to convince politicians that they need to change their minds."

Thus, the industry needs to work with organizations that focus on consumer protection and can attest to the good work that many advisors do with their clients because provincial governments tend to only hear about the unprofessional advisors, said Wilkinson.

"You have to be able to say that consumers are looking for a better way to protect themselves," he added, "and so, I think you're missing a natural ally, which is the client."

Advocis has advocated actively for a move to this type of regulatory system and worked with politicians in Ontario to have the development of self-regulatory organization (SRO) for financial advisors included in legislation, said Ed Skwarek, the panel's moderator and vice president of regulatory and public affairs with Advocis.

However, reference to an SRO for advisors was not included in the Canadian Securities Administrators' Consultation Paper 33-404, which proposes the introduction of a best interest standard and other targeted reforms, he said: "It's surprisingly disappointing to us that we see nothing about the concept that politicians were initially very bullish on in Ontario about having an SRO for financial advisors."

This exclusion doesn't necessarily infer that an SRO for advisors is off the table as the Ontario government is looking at the issue and Alberta's minister of finance has it on his radar, according to David Linder, executive director of the Alberta Securities Commission, who also spoke on the panel.

However, the possibility has been approached before with little movement, he said: "It's not being ignored, but it's been on the radar before and it hasn't gone very far."

One of the challenges to adopting an SRO for advisors is that the investment and insurance regulatory systems are different in the way they govern their segments of the industry, said Linder.

An SRO for advisors, in addition to the traditional regulatory system, would lead to the criticism that regulation is simply being duplicated, added Debra Foubert, another panellist and director of compliance and registrant regulation with the Ontario Securities Commission.

However, professions that regulate themselves do not have that additional traditional regulatory system in which government-mandated bodies licence those professionals, said Wilkinson.

If the SRO model for advisors is ever considered to be adopted, the traditional regulatory model would have to change, which leads to another potential consequence, he said: "Do you know how expensive [an SRO] is? That'll be on us to pay, but it makes sense as long as we don't have another set of rules."

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