What’s in a Title?: New FSRA Rules to Regulate “Financial Planner” and “Financial Advisor” Titles

On August 13, 2020, the Financial Services Regulatory Authority of Ontario (the “FSRA”) proposed the “Financial Professionals Title Protection Rule” establishing minimum standards for the use of the “financial planner” (“FP”) and “financial advisor” (“FA”) titles (the “Proposed Rule”). The Proposed Rule aims to curb the ambiguous use of such titles in an effort to bolster consumer confidence in the quality of the financial planning and advisory services received from individuals with such titles and to enhance the protection such titles confer on those financial professionals that have obtained the corresponding qualifications.

In its announcement of the Proposed Rule, FSRA indicated that public consultation is open for 90 days with feedback and comments due by November 12, 2020.

FSRA’s announcement follows the publication of legislation introduced by the Government of Ontario that will require individuals who use either the FP or FA title to be credentialed by a FSRA-approved credentialing body. The Financial Professionals Title Protection Act (the “FPTPA”) received Royal Assent in 2019. Once it comes into force, it will ultimately restrict the use of the FP and FA titles.

FSRA has stated that the purpose of the Proposed Rule is to embody the following goals:

• approval criteria for credentialing bodies that intend to offer a credential in order to ensure the effective administration of a credentialing program and that only qualified individuals are issued such credentials;
• approval criteria for a credentialing body to issue FP and FA credentials in order to establish a consistent, minimum standard for title users;
• the application process; and
• a transition period for individuals already using the FP and FA titles.

In accordance with these purposes, the Proposed Rule establishes a baseline competency profile that involves requiring that all FPs or FAs have:

• general financial services knowledge, including knowledge of the Canadian regulatory environment related to the sector in which the individual operates and understanding the fundamentals of economics;
• ethics, including the understanding of ethical practices and professional conduct in the financial services;
• considered client outcomes, including understanding how to deal with clients by gathering sufficient personal and financial information, establishing financial objectives, and periodic reviews of the client’s ongoing objectives, priorities and areas of need; and
• technical knowledge regarding one or more of the following areas: estate planning, tax planning, retirement planning, investment planning and alternatives, finance management and insurance/risk management. 

The Proposed Rule will require all credentialing bodies to demonstrate in their application to FSRA how their licence or designation aligns with the education requirements set out above and to be congruent with the ongoing purpose and substance of the legislation.

The Proposed Rule seeks to address a glaring absence of a regulatory framework governing the use of titles which resulted in consumer uncertainty about the expertise and knowledge of individuals providing financial planning and financial advisory services. Ultimately, the purpose of the Proposed Rule is to attempt to narrow the range of title usage in Ontario’s financial services marketplace and to ensure a consistent application of the associated credentialing process, having regard to the interest of the consumers and providers of such services.

Please contact Geoffrey Cher by email at [email protected] or any other member of our Asset Management & Investment Funds group if you have any questions or in order to seek assistance with the preparation of a comment letter to submit to FSRA by the November 12, 2020 due date for comments.

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.