A proposed private member’s bill to regulate financial advisors in Ontario passed its second reading in the Ontario legislature on Thursday. The bill will now move on to the Standing Committee on Finance and Economic Affairs for review.
Known as the Financial Advisors Act, 2014, the bill was first introduced in February by Rick Bartolucci, the Liberal member of provincial parliament (MPP) for Sudbury. The bill proposes to regulate all financial advisors who receive commissions or remuneration for advice in Ontario regardless of the type of product they sell. (See Investment Executive, The best regulatory approach?, March 2014.)
“The bill would enhance confidence in the sector and protect consumers,” said Bartolucci. “It is time to put financial advisors on the path to professional status.”
If the bill comes into law, financial advisors in Ontario would have to meet consistent proficiency standards, continuing education requirements, maintain errors and omissions insurance and abide by a code of ethics.
Greg Pollock, president and CEO of Advocis, which acted as an advisor in the drafting of the bill, is happy with the progress the bill is making so far. “We certainly were pleased with the comments we heard in the legislature today,” said Pollock in an interview. “There were some concerns raised by some of the MPPs that they felt should be discussed and brought to committee and we would agree with that.”
Michael Prue, the NDP MPP for Beaches-East York, was one such member. Prue spoke highly of the bill, but also raised concerns of industry groups, such as the Financial Planning Standards Council (FPSC). For example, the bill calls for the creation of a new oversight body for advisors, but is unclear as to which government ministry it would report to. Prue called for caution and more consultations to straighten out the details of the proposed bill.
“[We] need to do it right,” said Prue. “I think we need to have this discussion [and] the vehicle is in the committee and I welcome the good advice from Advocis, but I also want to hear from [other] groups.”
Other concerns raised by MPPs include the reasons as to why this legislation is being presented as a private member’s bill rather than as a government bill. “If the government truly wanted to do something about this, table a government bill not a private member’s bill,” said Victor Fedeli, the Progress Conservative MPP for Nipissing.
The Ontario government held consultations in January and solicited written submissions from the financial services industry on the regulation of financial planning. Quebec is the only province that regulates financial planners.
For Pollock and Advocis, whether the government is putting forward the bill or a member is a moot point. “In our mind’s there’s not a lot of difference,” he said. “We saw all party agreement here — today at least — on this legislation. It would suggest to me, in principle, there’s a very good foundation here for putting in place a profession of financial advisors so that consumers are clearly aware of who they’re dealing with across the table.”
If the bill makes it out of committee, any amendments made will be reported to the house and then voted on at a later time during its third reading. If approved, the bill will then be sent to the lieutenant governor for royal assent.