CSI backs regulation of financial planners

The group called for a balance between reducing confusion and providing meaningful titles for advisors with specialized skills

CSI backs regulation of financial planners

The Canadian Securities Institute (CSI) has released its comments on Ontario’s consultation paper on the regulation of financial planners.

“We are generally in agreement with the standards set out in the consultation paper with

regard to the requirements for a credible financial-planning designation,” the institute said.

Similar to the Investment Industry Association of Canada, CSI called for further guidance on the term “financial planning”, saying it’s needed to ensure that approved credentials cover the full scope of the activity.

The group also urged Ontario’s Ministry of Finance to limit regulation of the title “financial planner” only to those who provide comprehensive financial planning. It agreed that there are too many titles and credentials in the marketplace, but consumers seek a broad range of financial services and expertise.

“It is vital, therefore, that we find the right balance between reducing consumer confusion in titling and allowing advisors with specialized skills to hold meaningful and appropriate titles,” CSI said.

The group also noted that the CSA’s proposed NI 33-404 also addresses restrictions on title use, which could create confusion when implemented alongside the Ontario Ministry of Finance’s proposed regulation of the title “financial planner”. Instead, it suggested that the ministry and the CSA come out with clear guidance for advisors to use “only those titles that reflect the product sales license and/or the advice specialization” that they offer.

On the use of the title “financial advisor” or “financial adviser,” the group suggested that it be addressed as a separate issue under the NI 33-404 reform process. It maintained that the regulation proposed by Ontario should focus on “financial planners” who are qualified to provide comprehensive financial planning, while those who cover other specific parts of the continuum of “financial advice” should fall under another umbrella of regulation.

“Two credentials, in our opinion, meet the proposed recognition standards [for financial planners]: the Personal Financial Planner (PFP) designation and the Certified Financial Planner (CFP) designation,” CSI said.

The group also questioned the need to create a centralized database of financial planners, arguing that existing databases of both PFP and CFP designation holders in good standing could be used.

“A link from the government’s website (or regulators such as OSC and FSCO) to these existing databases should be sufficient,” it said, adding that it would co-operate with the government should it decide to create a public master list for investors to refer to.

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