A private member’s bill introduced by an Ontario Liberal member of provincial parliament (MPP) seeks to regulate all financial advisors in Ontario. However, some groups in the financial services sector have doubts that the “one size fits all” approach embodied by the legislation is best for advisors and their clients.

The bill, introduced in February by Rick Bartolucci, the MPP for Sudbury, would require all who purport to be financial advisors and receive compensation for providing financial advice to be registered in Ontario.

The proposed legislation does allow for some exemptions from registration, such as those people selling securities exempt from prospectus requirements and individuals licensed under the Registered Insurance Brokers Act.

All registered individuals would be held to the same proficiency standards and be required to follow a code of conduct, satisfy continuing education requirements and hold errors and omissions insurance.

Toronto-based Advocis, which acted as an advisor in the drafting of the bill, believes that placing all advisors under one system will benefit both clients and the sector.

Says Advocis president and CEO Greg Pollock: “Here you have these individuals advising Canadians about their long-term financial health. Yet, we don’t seem to have a standard set of rules out there to oversee their operation. We think that puts consumers in a bad spot, and we would like to see one standard across the table.”

However, other sector associations believe this approach would not work because of the disparate nature of the financial services business.

Cary List, president and CEO of the Financial Planning Standards Council (FPSC) in Toronto, argues that the term “financial advisor” is too generic and does not represent the numerous careers in the financial planning sector and the different skills required for each. However, he adds: “The notion of professionalizing or raising the standard for all financial advisors is an admirable one.”

The FPSC’s position is that any legislation needs to focus on one identifiable group that follows common standards and expectations, says List: “We think a tailored approach to financial planners is a more tenable solution than to capture the entire universe of all licensed individuals.”

Quebec is the only province that regulates financial planners.

The Investment Industry Association of Canada (IIAC) in Toronto also takes issue with the bill for its catch-all approach. The IIAC believes that regulating the term “financial advisor” will lead only to the duplication of regulatory requirements for its members.

Instead, like the FPSC, the IIAC believes any new legislation should be more focused, says Michelle Alexander, director of policy and corporate secretary with the IIAC: “We definitely support some additional clarity and standardization of individuals who hold themselves out as financial planners.”

The Mississauga, Ont.-based Independent Financial Brokers of Canada (IFB) does not support the bill, says Nancy Allan, executive director of the IFB, because it creates an environment of distrust toward the average advisor without fixing issues concerning supervision and licensing.

“Nobody supports unlicensed, unscrupulous people out there misrepresenting themselves to consumers,” says Allan. “But this bill isn’t going to address that.”

The proposed legislation also calls for the formation of a new regulatory body called the Office of the Director. This office would have the power to create regulations, enforce the code of ethics and levy penalties and fines against registered advisors who act contrary to the code.

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