The Mutual Fund Dealers Association of Canada (MFDA) is the latest regulator attempting to sort through the wide range of financial planning designations: the goal is to bring some standards to reps that hold themselves out as planners.
The MFDA issued a consultation paper today proposing possible rule amendments that would establish proficiency requirements for fund dealer reps that market themselves as “financial planners.” The self-regulatory organization already has a rule that regulates the sorts of business titles that reps can use. Now, it is considering possible amendments to that rule that would restrict the use of the “financial planner” title to reps that hold certain professional designations and/or meet other types of qualifications.
As the MFDA notes in its paper, the lack of proficiency standards means, “… there is significant potential for investors to be misled as to the qualifications of any individual using this title.”
Indeed, this issue has long dogged the industry, and investor advocates have continued to raise it as a significant threat to investor protection. Now, the MFDA is looking to address this concern within the fund dealer industry by “considering rule proposals that would prohibit [reps] from using the title ‘financial planner’ unless they have appropriate proficiency.”
The paper seeks input on which designations should meet the criteria for reps that want to call themselves planners. In particular, it asks whether some of the most common planning designations should be considered adequate qualifications for using the title. These include: the Financial Planning Standards Council’s Certified Financial Planner (CFP) designation; the Institut Québécois de planification financière’s FPl; the Personal Financial Planner (PFP) designation from the Canadian Securities Institute; and, the Institute of Advanced Financial Planners’ Registered Financial Planner (RFP) designation.
It also asks for feedback on whether a grandfathering provision should be adopted; and, if so, what the criteria should be to qualify for grandfathering, including both credentials and prior work experience.
The paper is out for comment until Dec. 4. The MFDA indicates that it will not be making individual submissions public. Instead, it intends to publish a summary of the comments it receives on the issue, as part of the rulemaking process.
This latest effort from the MFDA comes against the background of a long history of failed attempts to regulate the use of the “financial planner” title. Back in the late 1990’s, the Ontario Securities Commission (OSC) developed a proficiency requirement and exam that was to govern the use of the title. It was never implemented, after the Finance minister at the time refused to approve the rule amid industry lobbying.
More recently, the Investment Industry Regulatory Organization of Canada (IIROC) proposed its own rule proposals for regulating financial planning among its members; but that effort was eventually abandoned.
Ontario’s Finance ministry is once again considering the general lack of regulation for planners. Earlier this year, it launched an “expert committee” to review the issue. It is expected to provide its recommendations to the provincial government in early 2016.