A Liberal member of the Ontario legislature has introduced a private member’s bill that if passed, would create a single self-regulatory organization that would govern all financial advisors in the province regardless of the products they sell.Described as a bill that would provide “stronger consumer protection and higher professional standards,” The Financial Advisors Act, 2014 is backed by Advocis, The Financial Advisors Association of Canada, which represents 11,000 financial advisors across Canada

“With regulators discussing top-down rules, such as the banning of commissions and a statutory fiduciary duty, Advocis has taken a proactive, industry-led approach, and has successfully demonstrated how the professionalization of our industry is a better way forward,” Advocis said in a statement.

But the Financial Planning Standards Council (FPSC), which represents 22,000 licensed and certified financial planners in the country, says the bill does little to help consumers’ current uncertainty about which financial advisors sell which products and services.

“Our fear is that if you create a single regulator of all so-called financial advisors that you are actually perpetuating confusion because they still won’t know or understand the difference skill sets of the various people that may be able to help them with various forms of advice,” said Cary List, president and CEO of FPSC.

Marian Passmore, director of policy and COO at the Canadian Foundation for Advancement of Investor Rights (FAIR Canada), said the proposed bill is just replicating rules for advisors who are already regulated.

“We don’t need a whole new separate regime for financial advisors because most people who call themselves financial advisors are mutual fund salespeople, are regulated by IIROC or insurance advisors – all of whom are already regulated by different regulators.”

The bill was introduced by Rick Bartolucci, the Liberal member of provincial parliament for Sudbury in northern Ontario. The move comes amid consultations the Ontario Liberal government has been having with various industry groups for a number of months on several aspects of financial planning.

Withdrew its proposal

Two days after the bill was brought in, the Investment Industry Regulatory Organization of Canada (IIROC) withdrew its proposal for a new rule concerning financial planning, saying a “more holistic approach to the regulation of financial planners would be preferable to the relatively limited measures being proposed by IIROC.”

The proposed private member’s bill, now in second reading, would set up a “director” to deal with complaints and provides powers to inspect registrants and conduct investigations. As well, it would provide for a code of ethics and establish discipline and appeals committees to determine registrants who fail to comply with the code. Registrants who do not comply with the code may be subject to penalties including fines of up to $25,000 and revocation of their licences.

Financial advisors themselves were quick to make their views known on social media, some saying they see it as being saddled with yet another layer of regulation and costs. Many said consumers themselves probably wouldn’t notice any difference.

But Greg Pollock, president and CEO of Advocis, also said the bill is more about self-regulation and determining what is best for financial advisors themselves and their clients. He said regulators are like “corporations,” deciding what’s best for advisors. “By creating a profession of financial advisors whether you are a financial advisor working in a bank, an independent or working for a career organization, you will have the same kind of voice, an opportunity to come together with your colleagues on a regular basis and to discuss the issues that are of greatest importance to your clients,” said Pollock.

“At the end of the day this should lead to less regulation,” he said.

But Passmore said the bill is missing a number of elements that she feels are crucial to helping consumers. What’s absent, she said, is anything suggesting the requirement for a higher proficiency standard among advisors, or a statutory best interest standard. She also said there is nothing in the bill that would indicate a dispute resolution system that is an improvement on what is currently available or a solution to embedded third-party commission payments, a major concern FAIR has voiced.

“So I don’t see a lot there for the consumer. I don’t see [the bill] as pro-consumer particularly.”

While it may seem that both Advocis and FPSC have the same objectives at heart, each has been promoting its own views on how best to help their respective professions and consumers.

Advocis introduced its “raise the bar” program in February 2013, outlining a proposed Professions Model that would protect consumers by allowing them to count on the “professionalism and accountability” of their advisors. It calls for the title of “financial advisor” to be strictly regulated and for all of those holding the title to belong to a recognized professional association. Under this model, advisors and planners would meet ongoing proficiency standards, adhere to strict continuing education requirements, meet a code of professional and ethical conduct and maintain appropriate levels of errors and omissions insurance.

Advocis has also taken part in the ongoing Ontario government consultations – as has FPSC.

FPSC has been part of a group known as the Coalition for Professional Standards for Financial Planners, made up of the Canadian Institute of Financial Planners (CIFPs), FPSC, the Institute of Advanced Financial Planners (IAFP), and the Institut québécois de planification financière (IQPF).

On behalf of the coalition, the FPSC presented a set of principles it feels are most appropriate for financial planners to the Ontario government in mid-January.

Included in the recommendations are the adoption of a single, unified set of standards for financial planners and financial plans and adopting a unified definition of what constitutes a financial planner and a financial plan. At the same time, the coalition proposal recommended that only those who can show their competence by meeting a single, unified qualification standard, ongoing professional ethics and professional development requirements be called financial planners. As it now stands, Quebec is the only province that regulates the use of the “financial planner” term.

List said FPSC and Advocis are not on opposite sides – they just have different priorities.

“We are really talking about apples and oranges and this is what’s problematic because the conversation gets very confused,” said List. “We’re talking about a clear, distinct service of financial planning provided by planners. This [bill] is talking about all of the existing financial advice and laying in another level [of regulation] on it. They are very different things and they are not in conflict with each other. But it’s not our issue. Our issue is financial planning and financial planners.”

List said FPSC will continue to have talks with Advocis – and in fact, has had discussions since the bill was tabled.

Pollock agreed the two do not see eye to eye on who should be covered by this bill. While FPSC’s focus is on financial planners and financial planning, “our focus is much broader, it’s on all financial advisors being subject to a similar standard and a similar code,” said Pollock. “I don’t think we should set up two distinct arms – a financial planners’ profession and a financial advisors’ profession because I don’t think the public will understand that. It will just confuse the issue.”

Traditionally, a private member’s bill has a difficult time going through the legislature because it is not tabled as legislation by the whole government. Bartolucci has, however, succeeded in getting two previous member’s bills passed.

Should the government call a provincial election before the bill has gone through, it would die on the order paper and have to be brought forward again in the future. Bartolucci however, won’t be there to revive it: he has already said he plans to retire when his current term runs out.