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Canadian Groups Ask for Uniform Financial Planner Regs in Ontario

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As U.S.-based financial advisors await news on a new fiduciary standard, two groups in Canada are pushing for rules to accredit financial planners by using a single regulator in the province of Ontario.

Early Tuesday, the Investment Funds Institute of Canada (IFIC) and the Investment Industry Association of Canada (IIAC) asked the Ontario government to enact legislation to govern how financial planners are accredited and regulated. The groups also want Ontario’s provincial government to work with other provinces and territories to harmonize such rules and ensure that planners or advisors sanctioned or expelled in one area are given similar treatment in other jurisdictions.

“IFIC members fully support providing investors with enhanced protection and the comfort of knowing that the financial planning service providers and advisors they work with are subject to similar levels of registration, oversight and enforcement,” said Jon Cockerline, IFIC’s research director, in a statement.

The IFIC includes about 150 fund managers, distributors and industry service organizations, while the IIAC represents a similar number of regulated investment-dealer firms in the Canadian securities industry.

The groups made their push in response (via a joint submission) to the Ontario government’s Consultation on Financial Advisory and Financial Planning Policy Alternatives report.

“Securities and insurance advisory services and planning that are ancillary to product recommendations are already well-regulated in Ontario, but there are gaps in non-product-related financial planning that need to be addressed for the benefit of investors,” explained IIAC Vice President Michelle Alexander in a press release.

(Ontario has a population of nearly 14 million and includes Toronto, the largest city in Canada, as well as the country’s capital, Ottawa.)

The joint IFIC/IIAC position paper asks the government to set up common standards for individuals who create comprehensive financial plans for clients and/or use the title “financial planner” (or a similar title). Their proposal recommends the following:

A General Legal Framework for Financial Planners – developed by the Ministry of Finance in consultation with the Financial Services Commission of Ontario (FSCO), the Ontario Securities Commission (OSC) and a new Financial Planning Authority that includes clear definitions and harmonized standards for financial planners and financial plans, as well as criteria for approving accreditation bodies.

Creation of the Financial Planning Authority (FPA) – This proposed new entity, mandated by the Ontario government, will develop rules for the regulation of individuals providing comprehensive financial plans to clients and/or using the title of “financial planner,” and who currently operate outside of regulated channels. For individuals falling under its purview, the FPA would be responsible for registration, compliance exams, enforcement and client complaint-handling.

Establishment of accreditation bodies with limited authority – The accreditation bodies will only have authority over individual financial planners with respect to granting and withdrawal of financial planning designations.

Respect for the authority of existing regulators – The FSCO and the OSC would be required to incorporate the General Legal Framework for Financial Planners into their existing rules. They, and only they, would continue to regulate dealers or managing general agents and their respective businesses and agents operating within the insurance and securities channels. The Mutual Fund Dealers Association and the Investment Industry Regulatory Organization of Canada would be responsible for creating appropriate rules applying to financial planning activities of their members.

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