The Canadian Investment Regulatory Organization (CIRO) is planning a shift to an exam-based approach to industry proficiency, along with mandatory conduct training and new experience requirements for advisors.
In a consultation paper published Friday, the new industry self-regulatory organization said it wants to move to an approach that will test competence, coupled with mandatory training and continuing education requirements.
The shift was proposed following CIRO’s research into proficiency models used in countries such as the U.S., Australia and Singapore, which concluded that “assessments based on competencies and not based on courses are a best practice.”
CIRO’s research also found that “assessments based on courses offered by the same provider could create a conflict of interest.”
As a result, the new approach will not mandate any courses as prerequisites for exams.
Instead, the proposed model would include a general exam that all registered industry personnel would have to pass, along with nine separate exams for specific registration categories (retail reps, portfolio managers, traders, supervisory personnel, etc.). The general exam would cover content common to each category, with the specific exams testing competence in particular areas.
Along with the exams, CIRO is also proposing mandatory conduct/ethics training that all new approved personnel would have to complete within 30 days, and mandatory annual continuing education — likely one to three hours annually as part of the required CE that’s currently set at 10 hours of compliance and 20 hours of professional development. Both the training and CE would likely be delivered in an interactive, online format.
Additionally, the paper proposes an experience requirement for reps: either two years working in the financial industry or a relevant degree/diploma.
“This requirement, in addition to exams […] and mandatory training […] will ensure that those who are on the frontline providing advice to clients have the appropriate level of education and experience,” the paper said.
Ultimately, the goals of the new model include raising the bar on industry proficiency, enabling training to stay more current and relevant, improving the alignment between regulatory proficiency requirements and industry training, and lowering the costs of licensing.
Additionally, the SRO said that under its proposed model, it “will play a greater role in the development and design of its proficiencies.”
This will include the regulator being “actively involved in the exam design process,” and in designing the mandatory conduct training and continuing education.
The SRO intends to launch its new proficiency model in 2026, following the expiry of its current contract with the Canadian Securities Institute at the end of 2025.
The regulator also indicated it will issue requests for proposal for vendors to support the new regime once its proposed approach is settled, likely in the fall of this year.
In the meantime, the proposed approach is out for comment until Sept. 20. CIRO aims to publish its new proficiency rules by the fall of 2024.