Coalition says Ontario's approach to approving credentials 'set the bar too low'
If the Saskatchewan and New Brunswick governments want to consider standards for financial planners before national standards can be established, they should follow the Quebec rather than Ontario model, to provide the best consumer protection for clients.
“I’ve already had preliminary conversations with New Brunswick, and they’re not able to speak right now because the bill has been sent to the politicians for approval,” Jason Pereira, president of the Financial Planning Association of Canada (FPAC), told Wealth Professional. “So, we will be heavily engaging with them as they move on their current iteration.”
Saskatchewan is next in line as its Financial and Consumer Affairs Authority (FCAA) recently requested comment on its financial planner and financial advisor regulations to better protect consumers. It is concerned that a product-focused approach may result in poor financial decisions for clients.
Read more: One Saskatchewan advisor seeks balanced regulations
FPAC has formed a collation with the CFA Societies Canada and FAIR Canada, which is calling on provincial governments to establish higher standards for financial advisors. Pereira said that while it would prefer a national standard, that isn’t what is evolving right now.
While Saskatchewan’s proposal is better than Ontario’s framework, coalition members are disappointed with the Financial Services Regulatory Authority of Ontario’s approach to approving credentials for financial advisors because it’s product-focused approach doesn’t align with what most consumers expect from a financial advisor. In fact, the coalition believes that Ontario’s approach sets the bar too low, so places consumers at risk.
“If the possibility opened up to fix Ontario,” said Pereira, “we would jump at it in a heartbeat. But, at this point, that does not appear to be the case. So, as far as we’re concerned, the battlefront has moved elsewhere.”
As other provinces consider this field, he added, “we cannot simply say, ‘sorry, harmonization with Ontario is not the solution to protect our constituents’. We need to either set a different standard or align with other standards.”
Pereira said Quebec’s process has established higher proficiency standards for financial planners, and only those who meet them can use the financial planner title.
Read more: Other challenges in the industry
While he would rather see one national standard, which FPAC has been advocating for for several years, Pereira said the coalition is working with the opportunities that are presenting themselves.
“When we get these windows of opportunity to basically fix something in the industry,” he said, “we should be dealing with them as they are rare opportunities. When these windows open up, they’re not going to be revisited for who knows how long. So, that’s why I, and the others, feel that when these things come up, we need to get them right because we are setting the stage for the next decade of either having the right or wrong standard.”
“It comes down to two things,” summed up Pereira. “Public financial service is 100% based on one foundational building block – and that is trust. The more we do to create trust with consumers, the better it is for everyone, including consumers. Setting up legislation for professional standards and title protect should first and foremost always be looked at through the lens of consumer protection to basically give consumers great confidence in the industry.
“The second priority should be protecting people who actually do the job at a proficient level and making sure that those people are protected from the scoundrels that exist in the industry, so they can hold themselves up with pride, and consumers can expect an outcome in visiting that professional. It comes down to those two groups, and that is not what has happened here.”