Ontario’s provincial government released a consultation paper on Thursday that aims to gather feedback on the thorny issue of regulating financial planners.
The paper includes proposals that would regulate the use of the title “financial planner,” prohibit the use of similar titles and create a central database of financial planners.
The proposals follow some of the recommendations that the Ontario government appointed Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives proposed a year ago calling on the government to regulate financial planners.
In particular, the proposals aim to address the long-standing issue that there are no proficiency or licensing requirements for financial planners. This leaves consumers with no way to determine whether they’re dealing with a qualified financial planner.
This lack of standards, and the potential for consumer confusion, represents “a clear consumer protection concern in how Ontarians plan for their financial futures,” the consultation paper says.
The consultation paper represents an initial step toward fulfilling the Ontario government’s pledge to introduce a framework for ensuring that financial planners meet some proficiency requirements and for reducing the confusion created by the array titles used in the industry.
“The proposed regulatory framework would restrict the use of the title ‘financial planner’ to individuals holding a recognized financial planning credential. This would close the gap that currently allows the unregulated use of the title ‘financial planner’,” the consultation paper says.
“Financial planning credentials would be required to meet strict recognition criteria. This would ensure that all individuals using the title ‘financial planner’ in Ontario have the training and expertise to provide financial planning services,” the consultation paper continues.
In addition, the government is seeking to restrict the use of similar titles in a further effort to prevent client confusion.
“For the individual credential requirement to improve consumer protection, it therefore must be accompanied by a restriction on similar titles,” the consultation paper says.
The consultation paper lists several terms that could be prohibited in combination with the word ‘planner’. These include wealth, portfolio, retirement, insurance, and several others. “This list should not be considered exhaustive,” the paper says.
The paper also questions how the “financial adviser/advisor” title should be treated under the proposed framework.
To make it easier for consumers to check key information on planners, the government intends to create a new central, publicly accessible database for all financial planners in Ontario.
“The central database will provide a one-stop-shop where consumers will be able to verify whether or not an individual holding himself or herself out as a financial planner holds a recognized credential. This will reduce the burden of due diligence on the consumer and promote increased consumer confidence in financial planners,” the paper says.
“We welcome comments from a wide range of stakeholders including consumers, consumer advocates, credentialing bodies, individuals operating as financial planners and financial services industry associations,” the consultation paper says.
The consultation is out for comment until April 16.