Ontario Finance Minister Charles Sousa reiterated his pledge to enhance regulatory enforcement and to pursue greater regulation for financial planners in yesterday’s provincial budget, measures that are drawing praise from industry regulators and trade groups.
The 2017 provincial budget includes a promise made earlier by Sousa to introduce legislation that would allow industry self-regulatory organizations (SROs), such as the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA), to pursue the collection of their disciplinary sanctions through the courts.
The SROs have long sought this power, as their collection rates on fines against individuals are typically very low because sanctioned reps can avoid paying by simply leaving the industry. On March 31, at an industry conference, Sousa announced that he will introduce legislation to bolster the SROs’ collection powers, and that commitment is repeated in the new provincial budget.
In response, IIROC is once again applauding the move, saying that the measure will help strengthen investor protection and serve as a stronger deterrent to misconduct by reps.
“We welcome these important amendments as they will add teeth to existing IIROC rules,” said Andrew Kriegler, president and CEO of IIROC, in a statement. “As a result of the Ontario Government’s action, IIROC will be able to more effectively enforce its rules and hold wrongdoers accountable if they harm investors.”
Advocacy groups Prosper Canada and CARP (formerly the Canadian Association of Retired Persons) also expressed support for the move. “Strong consumer protection depends on effective powers of enforcement, so these are very welcome measures – particularly for more vulnerable investors who are often targeted and will benefit from their deterrent effect,” said Elizabeth Mulholland, CEO of Prosper Canada, a poverty advocacy group.
The latest budget also restates another recent pledge by Sousa, to pursue some of the recommendations made by an expert committee that was commissioned to study the regulation of financial planning and advice. Among other things, the budget indicates that the government intends to pursue the committee’s recommendations to address the lack of proficiency standards and regulatory oversight in the planning sector. It pledges to work with regulators to restrict the use of business titles. And, it says, it will examine the prospect of introducing a universal statutory “best interest” duty.
The Financial Advisors Association of Canada, a.k.a. Advocis, has indicated that it supports the general direction of these efforts and that it looks forward to participating in the process of creating actual reforms.
“We are pleased that the government is moving forward on many of the recommendations from the expert committee, which in many cases mirror the position that Advocis has been advocating for years,” said Greg Pollock, president and CEO of Advocis, in a statement. “We welcome the government’s plans to improve oversight of the financial advice and planning professions and to restrict the use of titles, as this will ultimately lead to a stronger profession and more protection for Canadian consumers.”
The Financial Planning Standards Council, which has long pushed for tighter restrictions on business titles, welcomed the government’s pledge to work with regulators on limiting the use of business titles.
“These issues have been left unaddressed for far too long, and we hope that as Ontario leads the way in this vital consumer protection issue, other provinces will take note and follow suit,” says Cary List, CEO of FPSC, in a statement.
The FPSC also says it will continue to weigh in on the possible introduction of a best interest standard, offering its insights to the government on how best to implement policies that reflect the expert committee’s recommendations.
“Once implemented, these policy changes will help Ontarians to make more informed choices regarding whom they work with to help guide them to financial well-being. We are very pleased by this announcement,” List says.
With files from Beatrice Paez
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