Financial advisors can expect industry regulators to begin conducting more reviews of industry practices in an effort to better understand the day-to-day challenges and realities that advisors face, according to Grant Swanson, executive director of the licensing and market conduct division at the Financial Services Commission of Ontario (FSCO).

Speaking at the Independent Financial Brokers (IFB) fall summit in Toronto on Tuesday, Swanson said that regulators are striving to keep up with the constant state of change in the financial services industry.

“Because the environment is changing – and it’s actually changing pretty quickly,” he said, “you can probably expect that more and more regulators are going to be asking you, either with surveys or other ways, what’s your perception of what’s occurring, and how you’re responding to the changing environment.”

As an example, he pointed to the life insurance product suitability review currently underway at FSCO. The regulator recently sent out a survey to a random sample of about 1,300 insurance advisors to gauge the types of practices they use when making recommendations to clients.

Swanson said the review is an information-gathering exercise for FSCO – a means of determining how things are done within the industry, to help gauge whether any regulatory action may be necessary. For instance, the survey results could reveal whether or not there are any gaps in the regulation of the industry, with respect to product suitability.

“This is just about being informed, and not jumping to conclusions about how business is done,” he said.

The new emphasis on reviews is part of a broader effort by regulators to ensure they’re developing regulations which are necessary, and which accurately reflect market developments and industry realities.

“We’re trying to be evidence-based,” Swanson said, “so that we’re not making decisions based on either misinformation, theories, or biases.”

Although regulatory changes could result from these kinds of reviews, Swanson said advisors should not be worried about the prospect of prescriptive new rules, since that’s not generally the approach that FSCO takes.

“The way we’ve acted in the past has been respectful of the information we’ve received, and trying to look at creative ways of reflecting the professionalism of industry without imposing a bunch of rules,” Swanson said. “Taking principles-based approaches, as opposed to prescriptive rules, supports professionalism.”