Closing the Loopholes, Raising Standards, Protecting Consumers
TORONTO, Feb. 18, 2014 /CNW/ - Today, one of the most important bills to
protect consumers was introduced in the Ontario Legislature. It is a
ground-breaking Act to regulate who can practise as a financial advisor
and the quality of advice.
Currently, anyone can hold themselves out as a financial advisor in the
province without having to meet consistent standards of proficiency or
ethical conduct. This lack of oversight leaves consumers exposed to
possible fraud or bad advice from unqualified advisors.
The Financial Advisors Act 2014 - a Private Member's Bill introduced by Liberal MPP Rick Bartolucci -
will change all that. When enacted, it will put in place the first
legislation in Ontario to directly govern the profession.
"Doctors, lawyers, engineers, accountants and many other groups are
regulated as a profession. It's time for those who are critical to the
financial well-being of so many Ontarians to be regulated as well,"
said Greg Pollock, President and CEO of Advocis, The Financial Advisors
Association of Canada.
Advocis is the largest voluntary association of financial advisors with
more than 5,000 members in Ontario (more than 11,000 nationally). It
has been championing enhanced consumer protection for more than a
decade. "We want to maintain the highest level of trust and confidence
in our profession," Pollock noted. "We want to prevent the unqualified
from practising, and put the unscrupulous out of business."
Existing regulation is focused on the sale and distribution of financial
products, and is fragmented by sector - insurance and securities are
regulated by different entities. This makes the system vulnerable to
"sector hopping." For example, an advisor found guilty of misconduct in
the insurance sector can continue selling mutual funds.
The proposed legislation focuses on protecting the consumer by governing
all financial advisors regardless of the products they sell. It would close the current loopholes in the system. Unethical advisors
would no longer be able to operate by moving from one product sector to
This harmonized approach will require anyone practising as a financial
advisor in Ontario, or serving Ontario clients, to register with the
new self-regulatory body. For the first time, consumers in the province
Assurance they are dealing with financial advisors who meet consistent
proficiency standards, adhere to a code of conduct, satisfy continuing
education requirements, and maintain errors and omissions insurance;
a single system that can deal with their complaints and has the power to
suspend or revoke an advisor's registration; and
Advocis envisions that consumers will also have access to a one-stop
database where they can check if their financial advisor is registered
with the self-governing body.
There are many different kinds of financial advisors. Some work in a
single sector, others are multi-licensed. Some charge fees, others
receive commissions, and still others are compensated through a blend
of the two. Some are specialists with advanced certification, others
"It would be a mistake to try to regulate by allowing only certain kinds
of advisors to practise," Pollock noted. "This would restrict their
numbers and reduce access." Studies have shown that consumers who
receive professional financial advice accumulate significantly more
wealth. A report from the Centre for Interuniversity Research and
Analysis on Organizations (CIRANO) in Montreal, for example, found that
those who work with an advisor have two to three times more financial
"A far better way to protect consumers is to regulate all advisors. This
will preserve choice, ensure that the millions of Ontarians now
benefiting from financial advice will continue to have access, and it
will establish industry-wide standards for all financial advisors."
Pollock said Advocis will support the Bill, and he expects it will
receive the backing of other stakeholders as well. "Consumers need this
enhanced protection, and so we think it will be widely supported by all
parties at Queen's Park, consumer advocacy groups, financial advisors,
and consumers alike."
Advocis, The Financial Advisors Association of Canada, is the
association of choice for financial advisors and planners. With more
than 11,000 members in 40 chapters across the country, Advocis is the
definitive voice of the profession, advocating for professionalism and
consumer protection. Professional financial advisors and planners are
critical to the economy, helping consumers make sound financial
decisions that ultimately lead to greater financial stability and
independence. Advocis works with decision-makers and the public,
stressing the value of financial advice and striving for an environment
in which all Canadians have access to the advice they need.
SOURCE: Advocis, The Financial Advisors Association of Canada
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