Ontario takes next step for ‘title protection framework’ around financial planners and advisers

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Ontario’s government has begun consultations to devise a plan that will crack down on people who use the title of “financial planner” or “financial adviser” but are not qualified to do so.

Earlier this year, the province passed legislation for the Financial Professionals Title Protection Act to improve oversight on qualifications and credentials used in the financial-services industry. The act requires anyone in Ontario who wants to use certain titles to obtain appropriate credentials and remain in good standing.

Now, with the legal groundwork laid, the Financial Services Regulatory Authority of Ontario (FSRA) – the appointed body that will oversee the initiative – is in the process of conducting round-table consultations to help develop the final rules.

“FSRA is having conversations to [ask] what is the right way to transition to a system where those titles will actually reflect a particular set of qualifications and expectations,” said Rod Phillips, Ontario’s Minister of Finance, to reporters at a regulatory conference on Thursday.

“We think that’s important from a consumer-protection point of view – so the consumers know that when they’re dealing with a financial planner they’re dealing with someone who has a set of qualifications they can rely on.”

Financial advisers typically help clients manage their investments, while financial planners help clients prepare to meet a goal such as retirement or a child’s education. The coming rule changes will make qualifications and credentials mandatory for individuals wanting to work in the industry and refer to themselves by either title.

Canada currently has no legislated national standard for those who offer financial planning or advice. Outside Quebec, which has its own rules, anyone can call him or herself a financial planner or adviser, regardless of certification, designation or educational background.

The FSRA has yet to specify which credentials would be recognized for financial planners and financial advisers, nor has it stated which professional organizations would enforce the rules.

Mr. Phillips, who also addressed the title-protection act during a financial-planning dinner in Toronto this week, said the consultations will help the government “clearly define” the terms used by advisers and planners for both the financial industry and consumers.

“There are rights and responsibilities with [advisers and planners] being the holder of those titles,” Mr. Phillips said to an audience of certified financial planners at the dinner.

“We are very confident that the kind of collaboration we have seen already [with the industry] is going to lead to a situation where Ontario, and perhaps other parts of Canada, will see citizens be able to benefit from your expertise and have confidence in what it means to be dealing with a financial planner or financial adviser.”

There are approximately 100,000 financial advisers in Canada, who typically help clients manage their investments. But only about 16,500 of them hold a Certified Financial Planner designation, according to FP Canada, the organization that oversees CFP qualifications.

A spokesperson for the FSRA said the organization recently held stakeholder consultations, which included consumer advocates, industry associations, credentialing bodies, professional associations and other Canadian regulators. The FSRA said the formal consultations will run throughout the first half of 2020, followed by a 90-day comment period; initial rules could be set by the end of 2020.

In addition to which credentials will be recognized for someone using the titles, the initial rules will also address the possibility of grandfathering certain segments of advisers; educational requirements; transition periods; and enforcement for those who use the titles but are not qualified.

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