New Brunswick’s securities regulator has approved its title protection rules, dropping an enhanced educational requirement for the “financial advisor” (FA) title — harmonizing with Ontario on education.
In a notice of adoption dated June 26, the Financial and Consumer Services Commission of New Brunswick (FCNB) says that “some minor changes” were made to its title protection rule, but the changes aren’t material so another comment period wasn’t necessary.
The FCNB dropped a proposed enhanced educational requirement for FAs — specifically, “providing suitable recommendations to clients concerning comprehensive financial and investment strategies.” That requirement now reads “providing suitable financial and investment recommendations to a client.”
The regulator said in the notice that it received nine submissions to its consultation early last year, and in an annex accompanying the notice, it summarized “varying opinions” on the now-dropped requirement. For example, a couple of submissions suggested the requirement could lead to confusion with the “financial planner” title.
“While we have removed [the] proposed requirement … we will continue to evaluate increasing the minimum proficiency requirements for FAs in the future,” the regulator said in the annex.
In a submission during last year’s consultation, consumer advocacy organization FAIR Canada lauded N.B.’s enhanced education requirement for FAs, but continued to advocate for a common standard for FA competency instead of a product-based approach, as both N.B. and Ontario have taken.
Someone licensed to sell mutual funds or insurance and someone with the CFA designation who is licensed as a portfolio manager can each hold out as an FA, FAIR Canada noted in its submission. “If individuals with substantial material differences in education, knowledge and skill can use identical titles, what does this say about the title?” it said.
FAIR Canada also reiterated its stance that title protection, as it stands, creates significant potential for consumer harm by addressing “a relatively minor problem.”
“To our knowledge, no regulator has provided any empirical data supporting their justification that minimum standards were necessary to protect the public,” FAIR Canada’s submission said. “Moreover, since adopting the title protection framework in Ontario, we are unaware of the [regulator] bringing a single case action against an individual for holding themselves out as a financial advisor or planner without first satisfying the ‘minimum standard.’ This suggests it was never a widespread problem to begin with.”
Potential for consumer harm from title protection arises because consumers expect that an FA can provide comprehensive and objective advice, FAIR Canada said, and that’s not necessarily what they get under title protection.
N.B. retained its enhanced criteria for credentials: they must be based on programs designed to ensure credential holders address material conflicts in clients’ best interests and put clients’ interests first when making a suitability determination.
N.B.’s title protection rules will come into effect on Jan. 1, subject to ministerial approval, the notice says. As in Ontario, the rules will be phased in over a two-year period in the case of FAs who used the protected title without an approved credential before Jan. 1, and over four years in the case of financial planners who used the protected title without an approved credential before Jan. 1. The transition allows title users time to obtain an approved credential.
Quebec’s title protection is considered the gold standard; the province has regulated the financial planner title since 1998 and restricts all other titles.
Saskatchewan’s proposed title protection rules include expanded education requirements for financial advisors related to financial planning; the rules have been in draft form for more than three years. A consultation in Manitoba on whether to adopt title regulation legislation was completed two years ago, with no action since.
In September, the Financial Services Regulatory Authority of Ontario told this publication that it, along with regulators in N.B., Saskatchewan and Manitoba, had established a cross-jurisdictional working group to discuss potential harmonization opportunities.