Ontario’s provincial government, with its plan to regulate the “financial planner” title, is wading into the Wild West of financial planning with a popgun. If the government expects to produce any meaningful change, it’s going to need much heavier policy artillery.
About a year ago, the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives, which was charged with recommending reforms for the largely unsupervised financial planning business, delivered a long-awaited final report that sets out the committee’s vision. That report concluded “definitively” that financial planning and advice should be regulated, and proposed a harmonized regulatory framework grounded in legislation and designed to ensure consumer protection.
In response, the government now issued a consultation paper that proposes to restrict the use of the “financial planner” title only, to set some basic proficiency standards for financial planners and to introduce a public registry of qualified financial planners.
To be sure, the lack of proficiency requirements and the mess of titles that have long afflicted the financial planning market are problems that deserve to be tackled. Yet, without the other reforms the committee recommended, the fix will be far from thorough and far from satisfactory.
The committee’s report stressed the need for three interlocking reforms. In addition to regulating titles, the proposal calls for measures to ensure regulatory oversight for financial planners and for the introduction of a statutory “best interest” duty. The report states that its “tripartite approach” should be adopted holistically. Yet, the government is opting to pursue just one element.
The history of policy-makers attempting to bring some oversight to financial planning in Canada is littered with past failures. By opting to pursue just one of the three elements the committee’s report proposes, the government seems certain to forsake consumers yet again. Even if the government succeeds in reforming the issue of titles, it will have failed to address the harm the committee’s report identified comprehensively.
Investors and financial planners deserve more than a one-third effort.