Many Canadians were shocked to learn in early April that someone who had been kicked out of dentistry for administering anesthetics dangerously is now a podiatrist performing foot surgery. According to news reports, the podiatry college itself objected to his becoming licensed in the profession, yet, incredibly, the college was powerless to stop it. The whole thing’s absurd, and people are understandably outraged.

But this kind of baffling imbroglio isn’t confined to our health-care system. Troubling parallels can be found in the way Canada’s financial services get regulated — or sometimes don’t.

For example, in those parts of the country in which securities regulation and insurance regulation are conducted in a fragmented and compartmentalized fashion, dual-licensed advisors who’ve been suspended or even banned from selling certain types of investment products can be left fully licensed and completely free to sell very similar products. This isn’t a rare occurrence.

Not long ago, for instance, Christopher Reaney was handed a suspension under the Ontario Securities Act for forging client signatures and other dishonest behaviour. The Ontario Securities Commission stated explicitly that he lacked integrity and was unfit for registration. Yet, even so, officialdom on the insurance side never barred him from selling insurance-based investments, including segregated funds.

Likewise, a two-year registration ban the Nova Scotia Securities Commission imposed on dual licensee Bruce Patrick Schriver didn’t prevent him from carrying on as an insurance representative fully authorized to sell seg funds. He remained a danger to his clients and went on to defraud several of them, earning him a three-and-a-half-year prison term.

Bad outcomes like this don’t always happen through inadvertence, either. Sometimes they’re produced by regulators with their eyes wide open. Take the case of Michael Darrell Harvey, who was banned for life by the Mutual Fund Dealers Association of Canada (MFDA) in 2012 because he was ungovernable. Specifically, Harvey refused to comply with his dealer’s directive to stop leveraged sales activity while they examined evidence that he might be churning, and then he refused to co-operate with the MFDA’s investigation into his conduct.

Somehow, the Financial Services Commission of Ontario (FSCO) concluded that these things weren’t serious enough to make Harvey unsuitable as an insurance advisor; and, thus, in 2014, FSCO quite consciously rendered a verdict inconsistent with the MFDA’s. In other words, looking at the exact same facts, one regulator found Harvey to be a menace, while the other, fully cognizant of that decision, said he had integrity (or at least plenty enough to be licensed).

The public can’t have confidence in this. It’s farcical. But it’s not funny because it allows bad actors to stay in the game and consumers stand to be harmed as a result.

So, what’s to be done? How do we fix these problems?

One answer is to have a single financial services regulator governing registrants in a comprehensive manner. Unfortunately, as we’ve seen, Canada’s constitution makes this difficult. In some provinces, politics makes it impossible.

Another approach is to reduce fragmentation substantially through strategic mergers of certain licensing bodies. A white paper recently published by the Investment Industry Regulatory Organization of Canada (IIROC), which proposes allowing mutual fund sales reps to work in IIROC firms, is seen by many as a not-so-veiled attempt to induce just such a merger with the MFDA.

But the IIROC white paper approaches the matter solely on the basis of business pragmatism, not investor protection. Even if it leads to some kind of IIROC-MFDA merger, there’s no assurance that the resulting structure will purposefully address, or resolve, or even dent any of the problems consumers face because of fragmentation. Moreover, merging the two self-regulatory organizations (SROs) would be a mega-project, likely taking several years to complete.

There’s another option; one that’s more immediately available. Much could be accomplished simply through automatic reciprocal enforcement of disciplinary orders. Regulatory fragmentation will cause far less mischief if all financial services regulators, including SROs, immediately adopt each other’s findings that a registrant is dishonest or ungovernable, and immediately impose, at a minimum, licensing penalties equivalent to those imposed by the originating regulator.

The effect of this wouldn’t just be remedial. It would also be prophylactic, because anyone tempted to stray from regulatory compliance in one financial sphere would know they’d have no ability to walk away and simply carry on business under an alternate licence. There would be no reinventing yourself as a different type of advisor: lose one registration by being dishonest or ungovernable and you lose them all.

Last year, Alberta took pioneering steps in this direction by giving its provincial securities commission the ability to enforce orders made by other Canadian provincial and territorial securities commissions automatically. Under this system, there’s no need for a hearing or review to determine whether some discretion to enforce the order can or can’t be exercised. It’s immediate and impactful, and that makes it a good model. But for its utility to be fully realized, it needs to extend to orders made by all financial services regulators and SROs — and each one of them must reciprocate.