two businesspeople shaking hands in silhouette

Investment industry trade groups are applauding the Ontario government’s budget promise to introduce qualifications for financial planner and advisor titles — but, as always, the devil will be in the details.

In its provincial budget on April 11, Ontario said it intends to move ahead with legislation to regulate the use of the planner and advisor titles, which are not currently subject to any restrictions or proficiency requirements.

To address that shortcoming, the government said it will adopt a framework requiring that users of these titles have an “appropriate credential.”

The promise is getting a thumbs-up from industry groups FP Canada (formerly known as the Financial Planning Standards Council) and Advocis.

FP Canada, which has long advocated for restrictions on the use of the planner title, called the government’s budget pledge “a significant step towards improving consumer protection in Ontario by providing clarity to help consumers make informed decisions about whom to approach for financial advice.”

This view is echoed by trade group Advocis, which said action to restrict the use of these titles was “long overdue.”

Advocis also said the move would represent a “concrete step toward recognizing the provision of financial advice as a true profession…”

The promise is also getting a conditional thumbs-up from Ermanno Pascutto, executive director of investor advocacy group the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada), who said he’s “pleased” to see that the government is planning to regulate titles, “many of which are misleading and sometimes meaningless.”

However, Pascutto pointed out that the details of just how title regulation will work are not yet known.

Indeed, the idea of regulating industry titles has long been a goal of regulators, policymakers, and industry and investor groups alike. However, past efforts have floundered for one reason or another.

Obstacles to title regulation include a lack of agreement on just what the qualifications should be to use particular titles, as well as the entrenched interests of various factions, from industry education providers to regulators and industry firms.

In yesterday’s budget, the government said its proposed new title protection framework “will take a measured approach to enhance consumer protection without introducing unnecessary regulatory burden, and will be mindful of the current regulatory oversight of licensees and registrants.”

Both FP Canada and Advocis also said title regulation is something that needs to be adopted across the country.

In the meantime, Pascutto said the government should be pursuing better regulation of investment fees, “as this is a major consumer and social issue of our time.”

He said current industry fee structures erode investor returns, undermine confidence in financial markets and the industry, and will “lead to serious problems for individuals and government when these people retire with inadequate retirement savings.”

“We hope that the government will support the [Ontario Securities Commission (OSC)] in regulating mutual fund fees including the elimination of deferred sales charge fees which are abusive, and also trailer fees charged by discount brokerage firms,” Pascutto said.

In its response to the budget, the Investment Industry Association of Canada (IIAC) didn’t specifically address the title regulation issue, but it did endorse some of the government’s other promises, including its five-point plan for bolstering the capital markets through a combination of initiatives — ranging from efforts to curb regulation to measures designed to support industry innovation.

IIAC said it “welcomes the Ontario government’s efforts to cut red tape, reduce business costs and support Ontario’s capital markets.”

In particular, it pointed to the government’s “credible plan” to bolster capital markets, its overarching commitment to deregulation and its plans for balancing the provincial budget over five years.