Industry group asks Ontario regulator for leeway, urges cost-benefit analysis and consultation on equivalent titles
The Investment Funds Institute of Canada (IFIC) has submitted its comments to the Financial Services Regulatory Authority of Ontario (FSRA) on its proposed rule governing the use of financial planner (FP) and financial advisor (FA) titles in the province.
Lauding the title protection framework’s objective of creating minimum standards while avoiding unnecessary burden for title users, IFIC argued that an explicit exemption must be made for individuals already registered with the Mutual Fund Dealers Association of Canada (MFDA) or the Investment Industry Regulatory Organization of Canada (IIROC).
“The minimum requirements to conduct registerable activities are substantially similar to the proposed minimum standards for using the FA title,” the group said. “As such, all SRO registrants should be able to use the FA title without any additional costs or oversight from a credentialing body.”
The SROS, IFIC added, already have rules against individuals holding themselves out in a manner that could be deceptive or misleading, such as using a business title or financial designation without having the required proficiency or qualifications. Beyond member firms’ day-to-day supervision, approved persons are also subject to regular business conduct exams by their SROs, which in turn are subject to oversight by statutory regulators.
“Given the existing SRO regulatory framework, we submit that any incremental requirements, oversight or costs to SRO members would be duplicative and unnecessary,” IFIC said.
The group also argued that relationship disclosures, which describe to clients the capabilities and services they should expect from a professional, should be considered as well.
“[I]n our view, creating a minimum standard for an indeterminate activity may introduce confusion and uncertainty rather than provide greater confidence in the quality of service being provided by individuals using the FP and FA titles,” it said.
Since securities registrants already provide their clients with relationship disclosure information, IFIC suggested that regulators consider to what extent title users who are not registrants provide similar transparency to their clients.
The group also urged FSRA to implement a fulsome regulatory impact analysis in line with Section 22(2) of the Financial Services Regulatory Authority of Ontario Act, 2016. Such an analysis, it said, should consider anticipated costs and benefits to various stakeholders, notably where there’s crossover between proposed rule and existing regulation.
IFIC also highlighted the inherent challenge behind the framework’s fundamental objective to restrict the use of FP and FA titles, particularly as distinguishing them from titles that are equivalent or could reasonably be confused with an FP or FA title is “a highly subjective exercise.”
“[I]f FSRA intends to consider a broader range of titles, it would be prudent to engage industry stakeholders in advance to consult on which titles are equivalent to, or could reasonably be confused with, the FA and FP titles,” IFIC said.