Amid contrasting provincial efforts to regulate financial advisor titles and proficiency, investor advocates are calling on provincial governments to seek higher standards.
In a joint release, FAIR Canada, CFA Societies Canada, and The Financial Planning Association of Canada (FPA) criticized the Ontario government’s effort at regulating titles for advisors and planners, and called for more stringent proficiency requirements.
“We are disappointed with Ontario’s approach to approving credentials for financial advisors,” said Jean-Paul Bureaud, executive director with FAIR Canada, in a release. “Ontario’s product-focused approach doesn’t align with what the majority of consumers would expect from a financial advisor.”
The criticism comes in the wake of controversy that arose recently when the Financial Services Regulatory Authority of Ontario (FSRA) approved an advisor credential that effectively mirrored the requirements already set by industry self-regulatory organizations.
“The number one consideration in implementing a title protection regime should be consumer protection, and credentialing approvals in Ontario are moving towards an increasingly troubling lowest common denominator,” said Michael Thom, managing director with CFA Societies Canada.
At the same time, the groups warned that low proficiency standards for advisors also risk undermining the conduct requirements set by securities regulators.
“Creating a system where the threshold to be a financial advisor is the same as someone who is able to sell a mutual fund means that any mutual fund dealing representative could become a financial advisor, essentially through a rubber stamp of the industry,” said Jason Pereira, president of the FPA. “Ontario’s approach effectively accomplishes little and instead of reducing regulatory burden, it actually increases it.”
Conversely, the groups welcomed efforts in Saskatchewan that contemplate the need for tougher standards.
“The Financial and Consumer Affairs Authority (FCAA) of Saskatchewan is exploring an approach that better protects consumers,” they said, noting that the “FCAA has expressed concern that a product-focused approach may be more than just disappointing for clients — it may result in poor financial decisions.”
“Saskatchewan should strive to build a model that better meets consumer needs and expectations for financial advice,” Thom said.