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Regulation of financial planners presents a great opportunity (May 17, 2018)

A co-ordinated approach that doesn’t duplicate existing regulatory oversight will address an important regulatory gap in investor protection

Guest column for Investment Executive

By: Paul Bourque, President and CEO, The Investment Funds Institute of Canada

Ensuring the financial services sector is fair, secure and efficient for all participants is a common goal that regulators, policy-makers and the industry itself all share, with the best interests of investors paramount at all times. As such, the investment funds industry strongly supports efforts and initiatives to improve investors’ experience and reduce their confusion about the financial services marketplace.

To that end, there are important opportunities to improve the regulatory framework. The regulation of financial planners presents such an opportunity. Consumers are right to expect high standards of competence and service when they engage with a financial planner. For this reason, the Investment Funds Institute of Canada (IFIC) believes there should be defined proficiency standards and credential requirements for financial planners.

IFIC supports restrictions on the use of the “financial planner” title to qualified practitioners who hold a recognized credential. This title must have a common and consistent meaning so that investors can rely on the fact that everyone who uses it has a common set of credentials, experience and expertise.

To achieve the objective of improving consumer protection, IFIC urges Ontario’s Ministry of Finance to work in concert with other provinces to develop an appropriate list of additional titles that only those engaged in financial planning activity should use. Such a co-ordinated approach will address concerns about consumer confusion across the entire financial services sector. The creation of a list of approved titles that encompasses the entire financial services sector, regardless of regulatory body, will have the result of protecting consumers.

Ontario one step closer to regulating financial planners

IFIC also supports defining what constitutes financial planning and leveraging that definition to determine which titles should be restricted to financial planning activity. To do that, broad title reform also needs to be done on a national level that involves a co-ordinated approach among the provinces. This co-ordinated national approach also will achieve the objective of lessening consumer confusion as well as improving investor protection. Working with other provinces also will ensure that consumers receive the same of level of protection regardless of where they live and the financial products or services they purchase.

This means having a harmonized approach to regulating financial planners that doesn’t duplicate existing regulatory oversight. Many financial planners within the insurance and securities industries already are regulated by their respective provincial insurance regulator, the Canadian Securities Administrators, or by one of the self-regulatory organizations. To do that, the ministry must continue to work toward a harmonized regulatory framework for financial planners so that those who already are subject to regulatory oversight would continue to be overseen by their existing regulator. The incumbent regulators will have to acquire the necessary expertise and resources to supervise financial planning activity properly and leverage the expertise and experience of the financial planning credentialing organizations.

The regulation of financial planning will address an important regulatory gap in investor protection. Creating clarity, minimizing confusion and enabling investors to make informed choices all serve to strengthen investor confidence and ensure a strong and stable financial services sector.