The regulation of “financial advisor” (FA) and “financial planner” (FP) titles in Ontario saw some action this week, with a new consultation that includes an important update for clients: a central registry of title users.
In an update that incorporates feedback from a consultation last year, the Financial Services Regulatory Authority of Ontario (FSRA) proposed on Tuesday that credentialing bodies be required to submit information posted on their websites to create a consolidated public registry of title users.
Based on consumer research commissioned by FSRA last fall, 60% of respondents said they’d prefer to have access to a single source that would verify whether an FA or FP were qualified to use their respective titles.
In addition to helping consumers, a single registry would help “advance the professionalism of the sector and strengthen the brand value of the FP and FA titles,” FSRA said in its update.
The creation of a central database of title users was a key consumer protection measure suggested by various stakeholders during last year’s consultation on the province’s title regulation. The new regime will require professionals who use the FA/FP titles to have FSRA-approved credentials from FSRA-approved credentialing bodies.
On Tuesday, FSRA also proposed shortening the transition periods for those who actively use the titles but didn’t hold approved credentials on or before Jan. 1, 2020. The proposed transition is now two years for FA title users and four for FP title users. Previously, these periods were three and five years, respectively.
“Shortening the amount of time that individuals who do not hold an approved credential can use the FP/FA titles will mitigate the potential for misuse/abuse of titles,” FSRA said.
In its update, the regulator also provided clarity on its supervisory approach to unregulated titles that could be confused with regulated ones. Consumer advocates have warned of the need to broadly restrict titles to avoid consumer confusion, as is done in Quebec, where the FP title has been regulated for more than a couple decades.
FSRA said variations on the regulated titles — such as “financial advisor consultant” and “financial planning manager” — could reasonably cause confusion, and it will review complaints about such misleading titles on a case-by-case basis.
Titles that would likely remain fair game ranged from the descriptive (“portfolio manager,” “asset manager,” “investment manager”) to the more expressive (“wealth coach,” “money guru,” “retirement counsellor”).
Such titles likely wouldn’t be reasonably confused with the regulated titles, FSRA said. But Neil Gross, chair of the Ontario Securities Commission’s investor advisory panel, suggested otherwise.
The FA/FP titles are “bound to be confused with any other title that evokes the notion of advice or planning about money matters,” Gross said in an emailed statement. For example, most people see no material difference between “financial planner” and “wealth counsellor,” he said.
While FSRA’s “been put in a tight spot” with the narrow remit of regulating only two titles, the regulator “needs to come to grips with all evocative titles,” Gross said.
Supervision details
In a document outlining its proposed supervisory framework for title protection, FSRA said it will review and investigate complaints about those who use a title without an approved credential and take action if warranted, such as issuing compliance orders.
Likewise, the regulator said it will review and investigate misrepresentations by credentialing bodies (CBs).
FSRA will also conduct annual compliance reviews of approved CBs based on the data they’re required to submit about their complaints and enforcement activity. FSRA said it may also conduct on-site reviews.
Annual reviews would ensure CBs continue to meet minimum standards outlined in the title protection rule, FSRA said, such as effective governance, professional standards and expertise to administer credentialing programs and oversee credential holders.
Overall, FSRA said its disciplinary processes for approved credentialing bodies and individuals may include warning letters, remediation plans, compliance orders and revocation of approval. Compliance orders will be posted on its website.
The new consultation also includes application details for CBs. Among the application revisions, the regulator strengthened language for CBs to describe how they serve the public interest by identifying, managing and addressing conflicts.
FSRA is consulting on its revisions until June 21.