Consumer advisory panel submits comments on areas such as regulation, title confusion, and credentialing bodies
It’s been said that with great power comes great responsibility. But in the case of the Financial Services Regulatory Authority of Ontario (FSRA), its mandate concerning the use of titles in professional financial services could be very difficult to oversee given its limited authority.
“[W]e recognize that FSRA has been given, under the [Financial Planner Title Protection Act] as handed down to FSRA by the Ontario government, a very limited mandate in regulating financial services professionals,” the FSRA’s Consumer Advisory Panel (CAP) said in its comments on proposed rules to govern the use of titles in the province.
“FSRA’s mandate is to regulate titles specifically, and to do so in an industry that is already regulated by other regulators, such as the Canadian Securities Administrators (CSA) and securities Self-Regulatory Organizations (SROs),” the panel said.
The CAP noted that while the FPTPA has a stated objective of efficient and effective regulation, the act and its associated framework effectively creates additional layers of regulatory burden for industry professionals, which include the FSRA and the new credentialing body (CB) that would be tasked with confirming credentials for professionals within the province.
“We also believe that additional layers (including the FSRA layer and the CB layer) increase regulatory burden … for consumers,” the CAP said, arguing that the consumer is the ultimate payor in any regulatory environment that’s challenging to navigate.
The CAP also raised concerns the FPTPA’s legislative language, particularly with interpretations restricting the phrase “could reasonably be confused with” solely to abbreviations and translations. To align with the legislative purpose of the act, it urged the province to adopt a more prescriptive approach, such as in Quebec where titles that should be considered reasonably confusing are specifically listed.
“[T]he CAP urges publication of prescriptive guidance to broaden the scope of the framework to include analogous titles,” the letter said.
Acknowledging that some of its suggestions may fall outside the scope of the FSRA’s remit, the panel recommended a host of criteria for the review of credentialing bodies or the substantive regulation of title users, including among others:
- A public interest mandate;
- A code of conduct consistent with protection of the public and clients;
- A code of ethics that prohibits acting in cases of conflicts of interest, and requires a best-interests standard;
- Development of requirements for annual and ongoing professional development; and
- Adoption of an appropriate standard of care
“We recommend that lobbying with respect to financial advice or planning activities should preclude entities from becoming an approved CB,” the panel said, arguing that recognition as a CB should come with a requirement to act in the best interest of Ontarians. “If CBs are able to levy penalties against their members, any such financial penalties should be enforceable in civil court.”
Some other key recommendations advanced by the panel were:
- Ensuring FP competency profiles reflect globally recognized financial planning profiles
- Required disclosures should include clear, comprehensive, plain-language disclosure of a title user’s credentials, a comparison of their credentials against others in the market place, and a discussion of limitations of their competencies and credentials
- Exemptions should not be granted, except for specific qualifications already subject to other frameworks of self-regulation, such as the chartered financial analyst (CFA) designation, in which case some review may be merited
- Fees paid by title holders should fund this regulatory regime with a view to minimizing costs, considering how costs can be passed on to the consumer.