How CSA’s sweeping proposals have stolen the limelight

By Katie Keir | October 12, 2016 | Last updated on December 6, 2023
4 min read

Over the last year, securities regulators across the country have been busy. The full impact of CRM2 has yet to be measured, but that hasn’t stopped regulators and government from searching for ways to better protect investors and further streamline financial industry oversight.


CSA’s proposed targeted reforms and best interest standard have garnered the most attention —they first came on the scene in 2012 through an initial exploratory consultation paper. But don’t forget: IIROC, MFDA and the Ontario government had all proposed their own improvements to the financial industry over the last few years.

Here’s a rundown of where those additional proposals stand.


In November 2015, IIROC released a white paper about a potentially game-changing proposal for mutual fund advisors. Under its proposal, IIROC wanted to:

  • eliminate its proficiency upgrade requirement to enable firms and individuals to offer only mutual funds and ETFs, versus requiring that these firms and individuals be knowledgeable about a full range of products; and
  • allow all firms and individuals under IIROC’s regulatory oversight to take advantage of directed commissions.

Read: Industry groups react to IIROC’s game-changing proposal

In its comment letter, the IIAC noted that this proposal would help many IIROC firms generate cost savings through operational adjustments, as well as provide registered mutual fund advisors with greater professional choice among firms by expanding the range of employment options they have from mutual fund dealers to IIROC-registered dealers.

But now, IIROC is pulling back and focusing on working with CSA. The SRO also promises to work toward reducing the compliance burden on firms and cutting down on industry fragmentation.

IIROC says, “Our response reflects the wide range of opinions put forward in response to the white paper […] It also reflects a number of developments in the policy landscape since we published the white paper, including proposals put forward by both our CSA partners and some of their governments that may render elements of the white paper moot.”

In particular, says IIROC, “The CSA proposals touch on a number of foundational elements of the securities regulatory regime, including proficiency requirements (which raise many of the same issues as IIROC’s illustrative proposal to eliminate the proficiency upgrade requirement did). The CSA has also published its next steps in the examination of mutual fund fees, the outcome of which may affect how mutual funds are distributed.”


Since June 2015, the British Columbia Securities Commissions (BCSC) and MFDA have been working on consultations that would allow MFDA advisors to sell ETFs, but also require that they obtain additional training before selling anything other than traditional mutual fund products.

In July 2015, the MFDA released a consultation document that outlines a proposed ETF proficiency standard. If such a proficiency standard were put in place, the MFDA would provide training to help its reps understand the characteristics and features of ETFs, and how ETFs would be offered through their particular dealerships.

On June 30, 2016, the BCSC then published for public comment proposed new MFDA Policy No. 8 Proficiency Standard for Approved Persons Selling Exchange Traded Funds. The comment period concluded on September 28, 2016.

The comment letters were primarily supportive of BCSC’s and MFDA’s initiative, particularly of the MFDA’s intention to provide in-depth training to reps to ensure they understand the mechanics of ETFs.

Read: Will new ETF rules let MFDA advisors compete with IIROC reps?

However, the letter from The Canadian Advocacy Council for Canadian CFA Institute Societies cautions that the MFDA should also consider the impact of CSA’s targeted reforms on these proposals if they decide to move forward.

The letter notes, “We wish to stress the importance of the CSA implementing, and the MFDA supporting, a regulatory best interest standard on all persons providing investment advice, including with respect to ETFs and mutual funds. Such a standard would help ensure that an investment or allocation of financial resources is in fact in a client’s best interests, […] and the investment industry would benefit if all professionals offering investment advice were held to this high standard.”

The Ontario government

In 2013, the Ontario government started questioning whether financial planning professionals need more tailored regulation and oversight. To find out how financial planning and advice should be regulated in Ontario, the Ministry of Finance conducted a consultation and appointed a dedicated committee that was tasked with providing recommendations to the government.

The committee has since released two consultation documents; the latest paper came out in April 2016, prior to the release of CSA’s targeted reforms and best interest proposals.

This latest paper proposes eight policy recommendations, which include:

  • more stringent regulation of people who use the financial planner title and/or offer financial planning services and products;
  • the introduction of a new regulatory body (the Financial Services Regulatory Authority, or FSRA) to oversee firms and people who act outside the current regulatory system; and
  • the introduction of a statutory best interest duty.

The comment period for the second consultation ended in June 2016. Submissions were received from many major banks and industry groups, such as the Canadian Institute of Financial Planners, CFA Society Toronto, FPSC, IFIC, IIAC and IIROC.

Read: Proposed advisor regs “too far-reaching,” say industry experts

The overall reaction to the committee’s second paper was mixed, with industry players saying the definition of financial planning activity is too broad. Further, rather than rewrite industry rules and processes, experts say the government should leverage regulatory bodies and systems that already exist, as well as consider what CSA already has in the works.

So far, nothing further has been announced by the Ontario government.

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Katie Keir

Katie is special projects editor for and has worked with the team since 2010. In 2012, she was named Best New Journalist by the Canadian Business Media Awards. Reach her at