In a recent regulatory bulletin, Advocis expressed concern about proposals which might eliminate the Financial Services Commission of Ontario (FSCO) and fold its functions into a single Financial Services Regulatory Authority (FSRA).
As we reported late last year, Ontario's expert panel believes the province's financial services regulatory regime is not as effective as it should be and recommended that the functions of several agencies be combined into a single, self-funded authority. The panel released its final recommendations in March, and Advocis is concerned that they may spell the end for principles-based insurance regulation in Ontario.
An unfortunate consequence
"FSCO's principles-based, outcomes-focused approach to regulation — carefully developed by the agency over decades of working with all industry stakeholders — could be swallowed up by the proposed FSRA, with the unfortunate consequence that FSCO's traditional principles-based approach could be replaced with a securities-style, rules-based model", reads the message from Advocis. "This change could happen suddenly, by regulatory fiat, or it could occur slowly, by intra-agency cultural change. Such a shift in regulatory philosophy is not necessary. Nor is it suitable to the task of effectively regulating the provision of advice and products by the province's licensed life agents."
Treated like lawyers or social workers
Advocis believes that financial advisors should be treated like lawyers or social workers who have certain rights and duties. It also says regulation without representation is unfair, inefficient, and a barrier to professionalism.
The association suggests that a self-governing Delegated Administrative Authority (DAA) with a code of professional conduct and a best interest duty is the best solution to the regulatory quandary in Ontario. "No amount of rule-making, compliance sweeps, and guidance bulletins will eliminate bad behaviour or make mediocre people more competent," says Advocis.
The complete bulletin is available on the Advocis website.