Industry association urges provincial regulator to carve out exemptions to avoid 'unnecessary duplication, confusion, and cost'
The Investment Industry Association of Canada (IIAC) has renewed its warning that the push to regulate the use of financial planner and financial advisor titles in Ontario could worsen the problem of regulatory overlaps in Canada
In a recent letter to the Financial Services Regulatory Authority of Ontario (FSRA), the association noted that the Canadian Securities Administrators (“CSA”) and its self-regulatory organizations (“SROs”), currently the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) currently provide an extensive framework governing the use of titles across Canada by those licensed to provide financial and planning advice.
“As a term of registration and continued registration, these individuals are required to understand the retail investment products they recommend and how they should be considered in the context of financial planning and advice, which may also form part of their continuing education,” IIAC said.
The CSA and SROs have also set a 2022 timeline for a new self-regulatory framework which would, among other benefits, have a nuanced proficiency-based registration that would retain the high standards of professionalism in the industry.
But with under financial planning title protection guidance that FSRA seeks to introduce, IIAC said FSRA would hold the power to approve the self-regulatory organizations as credentialing bodies. FSRA would then approve, supervise, and monitor various activities done by the SROs in granting credentials to be used by financial planner and advisor title holders, such as reviewing applications, complaint handling, and collection of data with respect to complaints and enforcement activity.
“[I]tems unintentionally either usurp or duplicate the role of the CSA and the current and new SROs, all of whom have clear national jurisdiction in respect of titling and address investor protection concerns,” the IIAC said. “Provinces seeking to implement their title protection regimes without exempting regulatory frameworks provided by the CSA and its SROs provide unnecessary duplication, confusion, and cost.”
While FSRA is allowing exemptions, it said the underlying policy rationale must maintain focus on protecting the public interest. The IIAC stood firm on its previous call to exempt CSA, IIROC, and MFDA registrants, arguing that it would avoid introducing unnecessary burden without compromising consumer protection.
It expressed similar concerns over another piece of the planned Ontario title protection framework where FSRA would design and implement a public registry for individuals that hold an approved credential in the province. Currently, the CSA provides a public national registration search database for those licensed to provide advice through its members and through an SRO.
“We support FP and FA title users disclosing their credentials, but we do not believe any additional mandated disclosure requirements are necessary for securities registrants,” IIAC said. “FPs and FAs at firms regulated by the CSA and its SROs are prohibited from using misleading titles and are subject to oversight by both their firms and their regulators.”
And while an initial January 1, 2020 date was set to clarify who can benefit from a proposed transition period, IIAC suggested that the timeline “now seems somewhat arbitrary and out of date,” and should be reset to let more registrants use the transition provision.
“To address FSRA’s concern that individuals would rush to begin using the FA or FP just in advance of the Rule coming into force, we suggest changing the date to December 31, 2021,” IIAC said.