For the time being, the financial planning standards published at the end of 2005 by the International Organization of Standardization will remain relatively obscure, says the Canadian member on the international development committee.

“As countries go back to their standards bodies and figure out how it will work in practice, they’re realizing it won’t work very well,” says Cary List, CEO of the Financial Planners Standards Council and who worked with the ISO to develop the standards.

While the practice standards look very much like those set out in Canada for both the certified financial planner and the registered financial planner designations, the chief problem is one of the ISO’s main tenants — that those who believe they meet the standards can simply declare their compliance.

“It’s open to abuse,” says List.

The Geneva-based ISO brought together national delegations from 38 countries (18 voting members and 20 observers), including financial planning professionals, regulators and experts from national standards organizations, to develop the standards. Led by accountant Stuart Kessler, a managing director of American Express Tax and Business Services Inc. , the committee published its standards. They are available on the ISO’s online catalogue at www.iso.org for 112 Swiss francs, or about C$100.

While the standards were approved by the ISO committee, which included Britain, the U.S., Australia, Austria, Sweden, Japan, Denmark and the Netherlands, very few member countries have adopted them as a regulatory or legal document. Britain — which has adopted them as voluntary standards — is an exception, along with Malaysia and possibly Norway, according to the ISO committee’s secretariat. Germany’s equivalent of the FPSC may use them as self-regulatory practice standards.

The ISO standards will remain a toothless document in Canada unless a member of the Canadian financial services community pays to have it developed and accredited by the Canadian General Standards Board, an arm of Public Works and Government Services Canada.

“The CGSB requires a request by the financial community to adopt the international standards,” says Shelly Donaldson, a communications advisor for business at Public Works in Hull, Que.

The CGSB is one of four standards development agencies accredited by the Standards Council of Canada, which is the Canadian member of the ISO.

If the standards, collectively called ISO 22222, were adopted by the CGSB, the federal government or a provincial government could name the standards in any legislation. The federal government, of course, would need to be motivated to do so — by either the industry or consumers. After that, it would be up to Public Works to determine if the ISO standards would reach regulatory or legal status.

ISO 22222 is a contained in a 36-page booklet describing the six-step process: establishing client/planner relations; determining goals and gathering data; evaluating the client’s financial status; developing and presenting the financial plan; implementing recommendations; and monitoring the plan recommendations. It includes ethical statements — much like the CFP and the RFP standards — plus a long list of glossary and reference terms.

Under ISO principles, companies can achieve compliance in one of three ways: self-declaration, second-party assessment or assessment by a third-party organization. The first method stands until a business is challenged on its self-declaration of compliance.

— GAVIN ADAMSON