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A strong set of standards is the cornerstone of any profession. These standards, which are typically set out in a code of ethics and rules of conduct, play a critical role in protecting consumers and providing members of the profession with guidelines to follow.

Self-governance is an important characteristic of professions, and financial planning should be no different. As with lawyers, engineers, accountants, architects and other professionals, financial planners must not only set and maintain their own standards for the profession, but they must also hold one another accountable for their actions and behaviours.

Canadians deserve to be served by financial planners who always act in their clients’ best interests. After all, financial planning plays a crucial role in helping Canadians map out a plan that will allow them to live their lives confidently.

Professional standards must be evaluated and reviewed regularly to ensure they remain appropriate and relevant to the real world. When applying standards in practice, financial planners must exercise professional judgment, with an overarching focus on acting ethically, competently and diligently.

With that in mind, after an extensive review of the Standards of Professional Responsibility for CFP Professionals and FPSC Level 1 Certificants in Financial Planning by the Financial Planning Standards Council’s (FPSC) standards panel — an independent group made up of financial planners from across Canada and a member of the public who ensures that consumers’ perspective is represented — FPSC recently proposed amendments to strengthen those standards.

It’s important for consumers and industry stakeholders to have their say on professional standards as well. Following a recent consultation period on the proposed amendments to the standards, FPSC’s standards panel is currently reviewing stakeholder input to determine a finalized set of standards, which will be published by the end of the year and take effect in January 2019.

The proposed changes included introducing a “duty of loyalty” in the code of ethics to replace and enhance the existing “client first” duty. Professional financial planners have long been held to a “client first” duty, which requires that they place their clients’ interests above all others. The proposed “duty of loyalty: further enhances this requirement, setting out the expectations of professional financial planners clearly by encompassing not only a “client first” duty, but also an obligation to mitigate conflicts of interest in their client’s favour and an obligation to act with the diligence of a prudent professional.

When clients sit down with a financial planner, they need to know that any recommendations made are appropriate for their individual circumstances and that the advice given is not influenced by any competing interests or other factors at play. When conflicts of interest do exist, they must, at a minimum, be disclosed to clients in writing and mitigated — always in the client’s favour. That kind of transparency is key to helping clients make informed decisions with confidence and ensuring successful and long-lasting relationships between the client and the financial planner. The proposed “duty of loyalty” would create such a framework.

New obligations to prospective clients also are included in the proposed amendments, which would ensure financial planners’ interactions with both clients and prospective clients are governed by the same standards of professionalism. These proposed obligations reflect the relationship-based — as opposed to transaction-oriented — nature of professional financial planning and further reinforce the profession’s commitment to the public interest.

Another proposed standard would prohibit lending to clients and borrowing from clients, with the exception of immediate family members. This prohibition is consistent with other professional codes of conduct. By lending money to clients or borrowing money from clients, financial planners create a conflict of interest that changes the dynamic of the relationship and can erode trust.

Financial planning is critical to Canadians’ well being. Establishing and enforcing strong professional standards — and taking steps to keep them relevant — ensures that consumers’ interests are protected throughout the entire financial planning process.