Ontario regulator's EVP, Market Conduct lays out expectations, next steps to ensure clients' interests come first
In a move that promises to create additional clarity for investors and financial consumers in the province, the Financial Services Regulatory Authority of Ontario (FSRA) has unveiled details of its plans to ensure proper conduct under Ontario’s title protection regime.
The supervisory framework, which aims to mitigate non-compliance with the Financial Professionals Title Protection (FPTP) Rule and promote proper conduct in the marketplace, was initially unveiled two weeks ago.
According to Huston Loke, executive vice president, Market Conduct at the Financial Services Regulatory Authority of Ontario (FSRA), the framework is a product of significant thought and collaborative conversation.
“You've got markets that are volatile, uncertain economic conditions, people in tough housing situations, and drastic changes in interest rates,” Loke told Wealth Professional. “People are looking for advice they can trust, so we want to help clarify and simplify things for investors.”
The framework will apply to FSRA’s approved credentialling bodies, individuals who use the financial advisor and financial planner titles in the province without the proper credentials, entities that hold themselves out as CBs without FSRA approval, and entities that falsely claim to offer a FSRA-approved credential.
Clients’ interests first
Under its inaugural Financial Planners and Financial Advisors Supervision Plan for 2023-2024, the provincial regulator laid out four key focus areas for approved CBs:
- ensuring their credential holders are putting their client’s interests first;
- administering and maintaining their credentialing program;
- ensuring their complaint-handling processes are fair, easily accessible and efficient; and
- making disciplinary processes transparent, consistent, and reasonable.
“We want to see the requirements to put clients’ interests first in the CBs’ materials. We want to see them part of the syllabus that's used to train to educate, to bring greater awareness to these individuals that use the financial advisor or financial planner titles,” Loke says.
“We also want to see proactive outreach. We want to see credentialing bodies connect with the financial advisors and financial planners and remind them of these requirements. And then we want to see how this translates into action.”
Learn what is the difference between a financial planner and a financial advisor in this article.
While FSRA expects all approved CBs to have transparent and accessible complaint-handling for clients of their credential holders, Loke says CBs have the discretion to offer that through a website, chat, a hotline, or another channel.
The regulator will also be watching closely to ensure reasonable service standards are being maintained to resolve complaints.
“The goal should be to serve the public interest and to protect consumers,” Loke says. “We want to see on an aggregated basis what the outcomes are, and how did each credentialing body maintain an effective process to respond to these complaints.”
Public registry in the works
To help consumers understand which CB they should reach out to if they have a complaint, Loke says FSRA is actively working on a searchable public registry of individuals who are authorized to hold themselves out as financial planners or advisors. That will include the specific credential or credentials they have, which CB issued it, and if they have a disciplinary history.
“All credentialling bodies require credential holders to self-report sanctions imposed by regulators,” he notes. “As we develop the registry, we’ll also identify if there are sanctions being imposed that we become aware of as well.”
But last month, CIRO unveiled a proposal to assess its registrants through an exam-based model of proficiency, in contrast to the education-based model under Ontario’s title protection regime.
“We are aware of the proposals that have been published,” Loke says. “We’re continuing to have discussions with them, and we’ll have more to say as time passes.”
Under its supervisory framework, FSRA has the authority to issue compliance orders against firms, individuals, or CBs that breach Ontario’s title protection rules.
While some may ask about the deterrent effect of compliance orders, Loke is quick to note Ontario’s title protection regime overlaps with other authorities, like CIRO or the Ontario Securities Commission, which also have the power to issue sanctions
“If someone were to sell a high-risk hedge fund and they’re not properly licensed or credentialled, for example, then other authorities will sanction it,” he says. “What they cannot do under our framework is to use the financial advisor or financial planner title, unless they’ve met our requirements.
“For those who fail to do that, we can issue a compliance order; we can make it very transparent on our registry that they are not a financial advisor,” Loke adds. “We can also take other measures to draw awareness to the fact that certain individuals are breaking the law when they use that title without an appropriate credential. I believe those would be very serious.”