Financial advisors should move to a system of self-regulation to prevent layers of government-imposed regulation from continuing to build on the industry, Ontario Minister of Revenue John Wilkinson said on Thursday.

A certified financial planner, Wilkinson addressed an Advocis symposium of financial advisors on the future of financial services distribution in Toronto. He warned that every scandal and incidence of fraud in the industry would likely lead to the government imposing more regulation, despite the fact that such fraudulent acts are committed by a very small portion of industry players.

“If you don’t like the way regulation is now, the path you’re on will lead to more and more regulation,” said Wilkinson.

He added that few politicians and civil servants have experience in the industry, which often results in regulations that aren’t necessarily efficient and effective for the industry.

Wilkinson urged advisors to take the future of the industry into their own hands by moving to self-regulation.

“That is the future, if we want to have a modern financial services sector,” he said. “It’s better for the consumer, it’s better for the industry.”

Wilkinson said developing a system of self-regulation in the industry would be challenging, and he warned that the idea may not be initially well received by the government. But he called on advisors to engage politicians, and prove that they would be strict in maintaining industry standards and enforcing the rules against all participants.

Wilkinson added that there still is a role for the government to play in regulating financial services. But he said that type of regulation should not exist in the relationship between an advisor and a client, because that relationship should be based on trust.

“They trust you,” he said. “We have to make sure that the people that cannot be trusted are not practising in the Province of Ontario.”

IE