The Ontario provincial government’s proposal to restrict the use of the “financial planner” title has wide support from the financial services sector and investor advocates. However, many people in each camp want to see bolder policy action, from tougher conduct standards to scrapping the term “financial advisor” as well.

In the past few years, the Ontario government has been wrestling with the lack of regulation for financial planners. Last year, the government declared that it’s finally ready to move ahead on this matter by setting proficiency standards for financial planners and curbing confusion among consumers about the vast array of business titles that are used in the sector.

In March, the government released a consultation paper setting out its initial plans. The paper proposes restricting the use of the “financial planner” title to individuals who meet certain qualifications; banning titles that suggest an individual offers financial planning services; and creating a public database of qualified financial planners.

Those basic ideas have garnered approval from industry groups and investor advocates. Indeed, any measures to address the long-standing lack of standards and vast potential for consumer confusion regarding the title appear to be welcome at this point.

After all, the problem with the lack of regulation for financial planning is not simply that the title creates confusion in the marketplace; rather, the title affects the whole concept of paying for financial and related advice.

“Consumers are directly impacted by improper advice from advisors [who] may lack appropriate training and education and, secondly, public confidence in financial advice is undermined,” notes the CFA Societies Canada’s comment on the Ontario government’s proposals.

Targeting the indiscriminate use of the “financial planner” title is expected to help address these issues.

The Institute of Advanced Financial Planners’ (IAFP) submission to the consultation states that this restriction will force many financial advisors to be more upfront with consumers about the nature of their services and to change their offerings: “Many individuals employed in the financial services sector will need to stop holding themselves out as financial planners.”

The IAFP’s submission adds that those who qualify to use the financial planner title under the proposed regime “will likely become less product-oriented and less specialized” and provide clients with comprehensive financial planning services while adhering to higher ethical standards.

All of this change should be good for consumers. But while any effort to address this fundamental gap in regulation is welcome, there also are calls for policy-makers to do much more than they’re proposing.

For example, the submission from Investor Advisory Panel (IAP), an independent investor advocacy group created by the Ontario Securities Commission, points out that the government’s proposals don’t establish who or what organization would oversee financial planners or financial planning.

Before any regulatory regime can be adopted, the IAP’s submission adds, the Ontario government must set out where regulatory authority will lie. The submission advises against creating a new body or self-regulatory organization (SRO) to oversee financial planning.

The submissions from both the IAP and the Canadian Foundation for the Advancement of Investor Rights (a.k.a. FAIR Canada) recommend that the government adopt robust conduct standards as part of the effort to introduce regulation in the financial planning arena.

FAIR Canada’s submission states that if the government really wants to address the policy concerns that have been identified regarding lack of regulation of titles used within the financial services sector, more than proficiency standards and regulated titles must be introduced: “You must institute a statutory best interest standard.”

FAIR Canada’s submission not only calls on the government to introduce a “best interest” standard, but also recommends that regulatory authorities be provided with the resources required to enforce that standard.

The IAP and FAIR Canada have long called for securities regulators to adopt a best interest standard in their arena, and this also was the recommendation of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives, which was charged with reviewing financial planning regulation and providing the Ontario government with advice on reform.

The committee’s final report, published in March 2017, concluded: “The plethora of misleading titles used in the financial services industry combined with the lack of a clearly articulated duty to act in the best interest of the consumer leaves Ontarians vulnerable.”

The committee’s report called for three-part reform: harmonized standards for advice and planning; regulating credentials and titles; and the introduction of a “universal statutory best interest duty.” The government has adopted only one of those three recommendations – and, arguably, the easiest one to accomplish.

For reform to work, the IAFP’s submission suggests, the government will have to take a hard line on outlawing the terms “financial advisor/adviser” as well.

Furthermore, the IAFP’s submission warns that if these titles are not prohibited, the government’s attempt at enhancing consumer protection will be undermined: “Consumers would need to be able to differentiate between financial planning/planners and financial advice/advisors, and we worry about special interests working against that ability.”

Another fundamental concern for some in the financial services sector is the lack of harmonized national standards for financial planners that would persist even if the Ontario government goes ahead with its proposals.

The Investment Industry Association of Canada’s (IIAC) submission states that any regulatory framework for financial planners must take a harmonized, national approach: “This is the only way that consumers can expect to receive uniform standards of service when they engage a financial planner. A patchwork approach to regulation, where different requirements exist in different jurisdictions, fails to provide the necessary level of protection that all Canadian consumers deserve.”

The submission from the Portfolio Management Association of Canada (PMAC) also calls for a national approach to regulating financial planners: “While we commend Ontario for leading by example, we believe that it is also of the utmost importance to work toward national harmonization in the near-term, where at all possible.”

PMAC’s submission calls on the Ontario government to work with other provinces, regulators and SROs to develop harmonized standards for financial planners throughout Canada: “We understand that this process will be a logistically and, perhaps, politically challenging one, but we believe that the value of a national solution cannot be underestimated.”