The Mutual Fund Dealers Association of Canada has published an amendment to Rule 1.2.1(d), clarifying reps’ ability to conduct financial planning outside of their dealer.

Currently, the rules require that a rep engaging in financial planning services other than through an MFDA member must provide those services through another person that is either regulated by a governmental authority or statutory agency or subject to the rules and regulations of a widely recognized professional association. “The objective of this requirement is to assist in ensuring that financial planning conducted by [reps] as an outside business activity is subject to a similar level of regulatory oversight as offered by the MFDA and to provide clients with a similar level of protection,” it explains.

However, the MFDA reports that there is some confusion about this provision. Dealers and reps have sought clarification as to whether financial planning carried on as an outside business activity must be conducted through a corporate entity and the meaning of “widely recognized professional association”.

The regulator says that the proposed amendments will clarify the rule, and more directly achieve its regulatory objective. It will continue to permit financial planning as an outside business activity provided the rep is regulated by a governmental authority or statutory agency. The amendments will remove the reference to “another person” and “widely recognized professional association”.

The proposed amendments have been approved by the MFDA’s board, and are out for a 30 day comment period.