Ontario Finance Minister Charles Sousa pledged the provincial government's support on Friday for reforms recommended in a recently published expert report on the regulation of financial planning and advice, but stopped short of committing to heed its call for a statutory best interest duty.
Specifically, the Ontario government intends to work with the province's financial regulators on many of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives' recommendations, said Sousa at an industry conference in Toronto.
The Expert Committee's final report calls for the government to introduce legislation that would give the Ontario Securities Commission (OSC) and the yet to be created Financial Services Regulatory Authority the statutory power to regulate advice.
This would include financial planners who aren't currently regulated; that the regulators should develop harmonized rules for planning and advice, including proficiency requirements and restrictions on the sorts of titles advisors can use; and that a statutory best interest duty should also be adopted.
"The government will develop and deliver specific consumer protection measures related to the panel's recommendations on financial planning and advisory services," Sousa pledged during a speech delivered at The New Paradigm of Financial Advice conference, which is being co-hosted by three think tanks — the University of Calgary's School of Public Policy, the C.D. Howe Institute and CIRANO — along with the Toronto Financial Services Alliance.
The Ontario government intends to work with the regulators to address "the regulatory gap that currently allows financial planners to perform work without regulatory oversight or specified proficiency requirements," Sousa said.
As for some of the specific reforms recommended in the Expert Committee's report, Sousa vowed to work with regulators to restrict the use of titles related to financial planning; address the report's call for a central registry of financial planners; and to consider its recommendations on referral arrangements.
Sousa was more circumspect on the question of whether the province would seek to adopt a statutory best interest duty for advisors. Although he did voice support for the notion that advisors should act in their clients' best interest, he stopped short of promising a statutory requirement.
The OSC is advocating for a best interest duty in the securities sector as part of a broader set of reforms being sought by the Canadian Securities Administrators (CSA), but the Expert Committee's report recommends the introduction of a duty that would apply across all industries within the financial services sector.
"The government will rely on both the [Expert Committee's] report and the outcome of the CSA's consultations as we examine the feasibility of a statutory best interest duty in Ontario," Sousa said, stressing that consultation in this area will continue.
"Bottom line: our actions are aimed at enhancing the obligations of financial advisors and financial planners toward their clients," he said.
The Financial Planning Standards Council (FPSC) — which has long advocated for regulatory standards for all those who use the title or hold themselves out as "financial planners"— lauds Sousa's comments on the Expert Committee's final report.
"Financial planners play a critical role in the financial health of consumers. We appreciate that Minister Sousa has embraced the report's policy recommendation that will help Canadians make more informed choices about their financial health with trusted experts who will put their client's best interests first," says FPSC President and CEO Cary List in a statement.
"Minister Sousa's timely comments on the report demonstrate that the government is taking the report seriously," he adds, "and we hope will ultimately carry the report's recommendations from the page into law."
Similarly, the Investment Industry Regulatory Organization of Canada (IIROC) is encouraged that Ontario is considering how best to move forward with the Expert Committee's recommendations.
"IIROC strongly supports the regulation of financial planning in Ontario and agrees that a harmonized regulatory framework for financial planning and financial advice would not only better protect consumers, but provide a more streamlined approach to the regulation of financial services in Ontario," says IIROC President and CEO Andrew Kriegler in a statement.
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