The Independent Financial Brokers of Canada (IFB) is calling for the proposed regulation of financial planning to become a matter for regulators from all industry sectors to consider, not just securities regulators.

The proposal from the IFB comes in a comment letter submitted in response to a new rule devised by the Investment Industry Regulatory Organization of Canada to regulate planning by its members. IIROC’s proposed rule would impose proficiency and supervisory requirements on investment dealers and their reps.

However, efforts to regulate financial planning in Canada have always run into controversy. One of the biggest issues for some is regulators from one industry sector claiming jurisdiction over an activity that may involve multiple sectors (such as securities, insurance and banking).

This complaint is central to the IFB letter, which says, “Of considerable concern to us is the potential effect of this rule on individuals who offer complementary financial services, in particular those who are both insurance licensed and securities registrants. We are deeply concerned that under the present wording dealer members will find themselves accountable for the supervision of insurance-related business conducted by registered representatives, even when conducted outside of the dealer.”

Moreover, it warns that reps’ objectivity could be compromised if they are required to conduct all of their planning activity through an investment dealer. “If dealer oversight extends to the activities of our members when they are conducting non-securities related financial planning services, this may well lead to situations where the dealer could pressure the advisor to promote a specific provider or service, thereby undermining our members’ ability to offer independent advice and the public’s ability to source such advice,” it suggests.

Given these concerns, the IFB recommends that, to avoid confusion, the proposed rule “be clarified to make it clear that financial planning activities related to the business of insurance are exempt from this rule.”

It also suggests, “… a multi-disciplinary approach seems suitable relative to determining appropriate standards for the oversight of financial planning. Therefore, we suggest that this is an undertaking which would benefit from being referred to the Joint Forum of Financial Market Regulators, as it is a body consisting of representatives from each financial sector and well-suited to considering the impact on each sector and to developing a harmonized approach.”

“Without the national, multi-disciplinary approach that this body can bring, consumers of financial services and participants alike will experience confusion,” it worries. The IFB also argues that a national approach, “will be much more efficient and better suited to meet the overarching goals of the rule.”