By James Langton

(February 21 – 14:30 ET) – The Ontario Securities Commission has sent its proposed rule for proficiency requirements for reps holding themselves out as providing financial planning and similar advice to the Minister of Finance for final approval.

The national instrument was delivered to the minister on February 9. If the minister does not reject it or return it to the commission for further consideration by April 10, or if the Minister approves it, the instrument will come into force on February 15, 2002. The Financial Services Commission of Ontario will recommend to the minister that a similar regulation be adopted for life agents at the same time.

Drafts of the rule were published back in December 1999, and regulators received extensive comment on the rule’s provisions. Although insurance and securities regulators in B.C. participated in this initiative, the B.C. Securities Commission won’t adopt the Ontario regime, and will continue to apply its existing policy dealing with financial planning proficiency requirements.

The BCSC proposes to include the exam required under the rule as one of the options available for satisfying its requirements, and the Insurance Council of B.C. is considering the same move. Regulators in Alberta and Manitoba also participated, but are not adopting the Ontario regime either.

The rule, which is going ahead in other provinces excluding Quebec, applies to individuals and firms registered to trade or advise under securities laws. It requires individuals who hold themselves out under a variety of titles specified in the rule, which imply financial planning, to satisfy a proficiency standard. The standard consists of: passing the Financial Planning Proficiency Examination, two years of insurance or securities industry experience in the last five years and a commitment to an approved continuing education program.

The FPPE will be identical for both securities registrants and insurance licensees and will be administered on a national basis. Individuals who have completed one of the financial planning education programs or testing processes specified in the instrument or who enroll in a specified program before March 31, 2001 and in most cases complete it no later than March 31, 2003 will not need to write the FPPE. This transitional relief will expire on March 31, 2004.

The regulators emphasize that the rule won’t affect dealers trading for their clients, but it will restrict the use of titles to “convey to customers the impression that objective, comprehensive, integrated financial advice tailored to their present and future financial circumstances is being offered. These registrants and licensees will not be able to hold themselves out to the public using these titles unless they have demonstrated their competence to provide the type of advice suggested by the titles.”

Among a few other changes, the Canadian Securities Administrators have added two programs to the transitional grandfathering exemptions following presentations made by the Canadian Association of Insurance and Financial Advisors. The CSA have added a grandfathering exemption to all those who passed the courses and examinations of the Chartered Life Underwriter program offered by CAIFA before September 1995. The second grandfathering exemption has been added for the comprehensive financial planning program offered by CAIFA.

The CSA have also decided to limit the equivalency exemption by explicitly restricting its application to the requirement for registration or licensing for two years within the preceding five years. “The CSA recognize that there are a wide variety of ways to obtain experience equivalent to two years of registration or licensing with a securities and insurance regulatory authority. These will be considered on an individual basis. It is anticipated that at a later date the CSA will publish a notice providing examples of the types of situations in which equivalency exemptions have been granted.”