On Oct. 21 the Quebec financial services regulator, the Autorité des marchés financiers (AMF), signed a memorandum of understanding with the provincial insurance regulator, the Chambre de la sécurité financière (the Chambre), and gave the green light to the Corporation des professionnels en services financiers (CDPSF), a new organization for financial services professionals. The twenty regional chapters that had been part of the Chambre will now officially become part of this new entity.As part of an effort to modernize its governance system, the Chambre has been working since 2011 to separate its member service activities from its public protection mandate. These member services are to be transferred to, and voluntarily undertaken by, the regional chapters. A memorandum of understanding outlining the terms and conditions of this transfer was submitted to the AMF and for industry comment this summer. It is this document that has just been approved, without any amendments or modifications.
The key part of the transfer is to make sure that continuing education is always provided, especially in remote areas of the province, but the CDPSF may also offer networking activities and promote advisor branding, among other things. Up until now, the CDPSF has been engaged primarily in gaining members from the Chambre. The memorandum also stipulates that the Chambre will pay $1.8 million to the CDPSF over a period of 3 years, after which the CDPSF should be able to stand on its own. As for the Chambre, it benefits from having a body at its side that is better able to take a leadership role in the profession.
In a letter to Chambre CEO Luc Labelle and signed by Eric Stevenson, superintendent of client services and distribution oversight, the AMF has agreed to the transfer project in principle. The superintendent explains that the transfer of activities respects the public interest and meets to his satisfaction the objections raised in six of seven submissions made by advisors or advisor groups during the comment period. The Chambre provided the AMF with detailed responses to these comments, and they are detailed in the agreement signed by the two parties.
Stevenson has therefore asked the Chambre to proceed to the next step, and change its regulations. This formality includes a public consultation after which the AMF should grant regulatory approval to the changes.
“We have not completed work on revising regulations, but it is clear that we will repeal the regulation on the chapters. In addition, there are probably some minor changes to be made to the Rules of Procedure (which govern among other things the composition of the board, the number of directors, and their term of office). We will not be changing everything: just enough to ensure consistency with our new regulatory structure,” commented Labelle in an interview with FlashFinance.ca, a sister publication of The Insurance and Investment Journal.
According to Labelle, this regulatory process has nothing to do with the CDPSF. “The chapters move to the CDPSF. The rest is a question of internal regulations for the Chambre,” he explains. And when will this final step be completed? “Within the coming months,” says Labelle.
Fully incorporated during the Chambre’s annual general meeting in June, the CDPSF welcomes this helping hand from the AMF. “The signing of the memorandum allows us to move forward in our business plan. We can get the funding to initiate major projects such as our proposed preventive compliance program and the Academy of Financial Services Professionals,” commented CDPSF CEO Mario Grégoire in an interview.
As for the Professional Association of Financial Services Advisors (PAFSA), an organization previously known as The Independent Association of Financial Advisors of Quebec, it is disappointed by this outcome.
“We expected the AMF to give its response at the end of September. When this stretched out another three weeks, we attributed the delay to a deeper consideration of our comments,” said PAFSA vice-president Michael Luciani in an interview. “So we had hoped that the objections would be accepted, but the decision went to the other side.”
In the submission it made during the consultation period, the PAFSA made several objections about the power the CDPSF has to defend advisors’ interests and the legitimacy of using the contributions from Chambre members to fund its activities. The PAFSA also challenged the legality of the Chambre delegating its training activities to this new organization.