The Canadian province of Ontario has launched a consultation to determine whether it should increase the regulation of those who offer financial planning services – including whether those who call themselves “financial planners” should meet certain minimum standards of education and/or certification.
In a consultation paper which seeks “comments from a wide range of stakeholders including consumers, consumer advocates, credentialing bodies, individuals operating as financial planners and financial services industry associations” the Ontario Ministry of Finance says it is “seeking input on the regulation of financial planners in the province” over issues it says “represent a clear consumer protection concern”.
For example, it notes, Ontario consumers seeking financial planning services “currently…confront an array of titles and credentials related to financial planning”, as was revealed by a mystery shopping exercise carried out recently by investment industry regulators in Ontario, which “found 48 different titles used across various industry platforms”, titles and credentials that it noted “may not accurately reflect an individual’s qualifications or expertise”.
“This, in turn, makes the process of obtaining qualified financial planning services unreasonably complex, as consumers are forced to decipher and evaluate the multitude of titles and credentials in the marketplace.”
Currently, Canada lacks a country-wide legal framework setting a minimum educational or qualification standard for those who offer financial planning, advice and services to Canadian citizens and residents. This means that for now, in every province (excluding Quebec, which does have such regulations in place) anyone who wants to is able to call themselves a financial planner.
The consultation comes after the Ontario government appointed a committee in 2015 to review the issue, and subsequently reviewed its recommendations.
Among the committee’s findings, according to an overview of the consultation posted earlier this month on the Ontario Ministry of Finance’s website, is that “there are no uniform standards for the use of titles in [Ontario’s] financial services sector”, with the exception of the mortgage-brokering sector.
This, the expert committee noted in the report, has created “a lack of consistency” in the market, “which allows individuals to use the title ‘financial planner’ without necessarily having the expertise to provide financial planning services”.
“Titles and credentials are intended to give an impression of expertise and instill consumer trust. When these titles or credentials are not backed up by real expertise, this trust may be misplaced.”
The three main proposals the Ontario Ministry of Finance consultation is considering adopting are a restriction on the use of the title ‘financial planner’ to “those individuals holding a recognised financial planning credential”; a ban on the use of titles similar to ‘financial planner’; and the creation of a central database of financial planners.
To read more and comment on the proposals on the Ontario Ministry of Finance’s website, click here.
The consultation is open until 16 April.