Advocis president and CEO, Steve Howard, says that he is concerned about securities regulators’ failure to recognize the role of advice in developing the regulatory system.

“Whether it be in insurance, securities or mutual funds, the role of advice and advice givers in not recognized. And yet it is advice that convinces consumers that they should be purchasing those products,” says Howard in a statement.

He laments that recent regulatory reform initiatives, including the Canadian Securities Administrators’ Uniform Securities Legislation project, fail to put advice at the centre of advisor regulation. “None of the governing regulations for these disciplines recognizes the role of advice. If the Canadian Securities Administrators has its way, we still won’t recognize the role of advice under Uniform Securities Legislation and it will be some time before they get around to thinking about it.”

Howard argues that the Ontario Securities Commission’s attempt to address the importance advice through its proposed Fair Dealing Model is insufficient. “It is not as simple as clarifying when consumers are relying on advice givers as the OSC’s Fair Dealing Model has suggested. It really is about ensuring that those that give the advice are qualified to give it,” he says.

Advocis is advocating that various industry designations should be established as a requirement for those that purport to offer advice, a plan it announced at its national conference in St. John’s in June. “Consumers don’t need the regulators to build a parallel system, like the Fair Dealing Model — adding more cost and complexity. What consumers need is for the regulators to partner with associations such as the FPSC, AIMR, the CSI and the CLU Institute that are already offering a far higher standard to the public than the regulators can even envision,” Howard says.

He says that, if the regulators approach the issue in this way, it won’t be adversarial “because advisors have already indicated their willingness to voluntarily attain designations. It will foster accountability at the advisor to consumer level. And it will save costs.”

Another advantage is that this system of ensuring proficiency and granting designations is already in place and operating on a national basis. “Regulation begins to look like a self-perpetuating business rather than a consumer-driven activity when it ignores the higher standards that are already in place and opts instead to go for the lowest common denominator of regulation simply because it is home grown,” Howard concludes.

“If the whole exercise is about consumer protection and the efficiency of capital markets, regulators partnering with professional associations is the fastest and cheapest way to get there. And it is the best answer for consumers.”