A young family turns to their physician, who they know is regulated in their province, for their medical needs. They are confident in their choice because they know the title “medical doctor” is a protected title and not anyone can use it.
They turn to their lawyer, who they know is regulated in their province, to help close the deal on their first home. They are confident in their choice because they know the title “lawyer” is a protected title, and that not anyone can use it.
They then turn to their financial adviser, who they assume is regulated in their province, to help them build a plan for their child’s education. However, that financial adviser might not be the professional they are expecting. Anyone can adopt the title of financial adviser, regardless of their qualifications.
This leaves Canadians like that young family at risk of having their investments mismanaged – or worse. Over the years, there have been many stories about Canadians being robbed of their retirement and/or their savings by unscrupulous individuals presenting themselves as financial advisers or financial planners.
It’s time for more provincial governments to take action to protect Canadians seeking financial advice.
Quebec already has title protection for financial advisers and financial planners. Ontario recently followed Quebec’s example with legislation that requires individuals using the titles of financial adviser or financial planner to have an appropriate credential and be overseen by a recognized credentialing body.
Other provinces should do the same. There is public support for it.
Advocis, the association of professional advisers in Canada, commissioned polls in five provinces between October 2018 and March 2019. They found that, on average, half of the respondents believe the title of financial adviser is protected in their province.
When informed that this is not the case, over 80 percent said a professional code of conduct should be mandatory for all financial advisers. Most importantly, nearly 90 percent of respondents expressed support for legislation protecting the title of financial adviser.
For over a decade, Advocis has been telling governments and regulators across the country that the lack of title protection for financial advisers and financial planners presents a serious risk for hard working families seeking professional financial advice.
In his first budget in April this year, Ontario Finance Minister Vic Fedeli committed to moving forward with The Financial Professionals Title Protection Act. The Act requires individuals using the titles of financial adviser or financial planner to have an appropriate credential and be overseen by a recognized credentialing body.
In the Act, a credentialing body is an entity or body, similar to the one that oversees accountants or lawyers, that meets criteria established by the Financial Services Regulatory Authority (FSRA) and approved by the minister of finance.
The FSRA and the government will create a credentialing body and define what it would look like ─ the composition of its board and its answerability to regulators and the minister. The body will exercise powers and authority over members, which will be delegated by the FSRA and the government. Its oversight could include ensuring the minimum educational requirements for achieving the titles of financial adviser or financial planner, establishing the criteria relating to continuing education, developing a code of ethics, and requiring that members put the interests of consumers ahead of their own interests.
Advocis and other stakeholders expect the threshold to qualify as a credentialing body will be high, and that the requirement for being allowed to use the titles of financial adviser or financial planner will be set equally high. Section 15 of The Financial Professionals Title Protection Act stipulates that a qualifying credentialing body will have a governance structure and practices and a disciplinary process. A qualifying credential will include educational requirements, examination requirements, adherence to a code of ethics and continuing education requirements.
This new structure will go a long way in building greater consumer confidence and helping to present financial advisers and financial planners as professionals.
Quebec and Ontario have taken action to protect consumers seeking financial advice; it is time that other provinces across the country adopted a similar approach. Canadians deserve to be confident in their choice of professionals when it comes to their financial health.
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