There’s too little regulation of financial planning in Canada, which is confusing investors about which advisors are qualified and enabling fraudsters to profit, according to John Lawford, counsel with the Public Interest Advocacy Centre.

Speaking at the second annual Advocis regulatory symposium in Toronto on Monday, Lawford said that Ottawa-based PIAC, a non-profit organization that provides legal and research services on behalf of consumer interests, is campaigning for changes to the regulation of financial planners.

PIAC has conducted research through focus groups of financial advisors and investors, and found that participants had little understanding of what financial planners do and how they’re regulated.

“We had a very uniform level of confusion about what financial planning was at all – both from the clients, and from people who called themselves financial planners,” Lawford said.

Many investors who participated in PIAC’s focus groups viewed financial planning as simply a tool that advisors used to sell financial products.

While the planners surveyed felt that securities regulation was adequate to protect clients, and already too onerous, the investors surveyed indicated that more regulation may be necessary. They called for financial planners to be subject to licensing, core competencies and mandatory designations.

PIAC is calling for more regulation in Canada since under the current system, anyone can call himself or herself a financial planner, and so investors often have no way of determining whether an advisor is qualified. This is making it easy for fraud artists to profit, and the confusion that this creates among investors may retard growth of the industry, according to Lawford.

PIAC suggests establishing a professional self-regulatory body for financial planners in Canada, and setting out specific requirements that individuals must meet in order to identify themselves as financial planners. Quebec’s financial planning regulations could be used as a model for the rest of the country, the advocacy centre suggests.

Lawford said this is part of a growing trend around the world to regulate advisors with respect to the advice they give rather than with respect to the products they sell.

“That is the direction that we’re going,” he said.

While there hasn’t yet been a huge movement towards this goal in Canada, Lawford said PIAC and other consumer groups are beginning to campaign for this type of regulatory change. This has partly been brought on by media attention on Ponzi schemes and fraud artists such as Earl Jones in recent years, he said.

Lawford said PIAC intends to push for regulatory changes that aren’t too onerous for advisors.

“We’re interested in shaping it in a way that lets you all continue to do what you’re doing, and not piling on extra levels [of regulation].”

He said PIAC hopes to work with the industry to develop regulations. It’s also important for industry groups such as Advocis to coordinate their efforts with regulators, Lawford added.

IE