Ontario approves new rules governing use of financial planner and adviser titles

Ontario’s Finance Ministry has given the green light for a new set of rules governing employees in the financial services industry who use the titles “financial planner” or “financial adviser,” standards designed to protect investors from doing business with unqualified individuals.

On Tuesday, the Financial Services Regulatory Authority of Ontario (FSRA), which has spearheaded the rule changes since 2019, announced that the Financial Professionals Title Protection Rule will be proclaimed into force in Ontario on March 28.

“Until now, there has been no regulation of the usage of Financial Planner or Financial Advisor titles,” Huston Loke, executive vice-president of market conduct at FSRA, said in a statement. “This has contributed to confusion among consumers, and questions about the expertise of individuals offering financial planning and advisory services.”

The statement added that, “Deciding how to invest your money is complicated and emotional and requires expertise and good judgement. This change is long-overdue and offers something consumers have been asking for: clarity and confidence when working with their financial professional.”

Financial advisers typically help clients manage their investments, while financial planners help people devise strategies to meet goals such as saving for retirement or a child’s education. In 2019, Ontario passed legislation to pave the way for the Financial Professionals Title Protection Act, which provides oversight of qualifications and credentials used in the financial services industry.

Ontario’s announcement will also help spur change in other jurisdictions and promote consistency among people across the country who use the titles, FSRA chief executive Mark White said in an interview with The Globe and Mail. Mr. White has been working to harmonize Ontario’s rules with those in other provinces – including Saskatchewan and New Brunswick – that are proposing similar title protection frameworks.

The coming rule changes, which will be phased in over time, will make qualifications and credentials mandatory for people who work in the industry and refer to themselves by either title.

Financial planners will have a four-year transition period, while financial advisers will be given a two-year time frame. Individuals who were using these titles prior to and on Jan. 1, 2020, will be given “ample time to comply with the framework following its implementation,” FSRA said in a statement.

People who began using the titles after Jan. 1, 2020, will “have to get credentials from a FSRA-approved credentialing body immediately,” it added.

The rule change comes two years after industry groups advocated for stricter standards for individuals who provide financial advice to Canadian investors.

There are about 100,000 financial advisers working across the country. But Canada has no legislated national standards for those who offer financial planning or advice. Outside Quebec, which has its own rules, anyone can call themselves a financial planner or adviser, regardless of certification, designation or educational background.

Mr. White said he is in discussions with four organizations that have applied for authorization to certify people to use the new credentials. FSRA will publicly announce the final list of approved credentialling bodies after the new rules take effect on March 28.

One of the most widely known credentials is the certified financial planner (CFP) designation, administered by the professional body FP Canada. About 17,000 people in Canada hold it, with 9,000 of them in Ontario. FP Canada also administers the Qualified Associate Financial Planner (QAFP) certification, a designation launched in 2019 for people who serve a broader population of Canadians with less complex financial needs. Currently there are 1,900 QAFP professionals in Canada, about 900 of them in Ontario.

FP Canada chief executive Tashia Batstone said the CFP and the QAFP have been submitted to be approved as approved credentials, and that she anticipates both will be selected by FSRA.

“Our organization has been championing this kind of legislative framework for many, many years and today’s announcement is a big win for consumers,” Ms. Batstone said in an interview. “Clients are going to have the ability to put confidence in the individuals who are calling themselves financial planners and financial advisers, and know that those individuals will have the skills and training necessary to put their best interests first.”

The Financial Advisors Association of Canada – known as Advocis – has also applied to become a FSRA- approved credentialing body. It is submitting its existing professional financial advisor (PFA) credential to be eligible for both the financial adviser and financial planner titles, and its Chartered Life Underwriter (CLU) credential to be eligible for the financial planner title in Ontario.

“This is an important step forward in raising the bar for our members and our clients,” Advocis chief executive Greg Pollock said in a statement. “Now only will this help strengthen consumer confidence in choosing who to partner with, but will also help promote consistency and professionalism among those individuals using the titles.”

Two organizations that have not yet applied to be included, said Mr. White, are the Mutual Fund Dealers Association of Canada (MFDA), a self-regulatory organization (SRO) that oversees about 90 mutual fund companies and distributors, and the Investment Industry Regulatory Organization of Canada (IIROC), which supervises 170 investment dealers. The two SROs are currently in the process of merging to establish a new single one.

The MFDA and IIROC have been involved in the industry discussions with FSRA, and Mr. White told The Globe he is “still hopeful” the SROs will apply to be credentialing bodies at “some point in the future.”

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