Some of the proposed revisions to the Investment Industry Regulatory Organization of Canada’s (IIROC) continuing education (CE) program have drawn criticism from industry.
In July, IIROC published a notice outlining the proposed changes, which included introducing a late filing fee for dealer firms that fail to report advisors’ CE credits to IIROC within 10 business days of the end of a CE cycle.
Under the proposal, a dealer firm would be fined $100 per day for each advisor it has failed to report CE credits for, beginning after the 10th business day of January and extending to the final business day of January.
In a written submission, the Investment Industry Association of Canada (IIAC) voiced its support for the fee proposal. “The daily fine structure provides the opportunity for firms to rectify errors early and avoid or minimize the potential penalty by filing as soon as possible,” wrote Mustapha Saleem, a policy analyst with the IIAC.
However, IIROC also proposed suspending advisors if their firms haven’t reported CE credits by the last business day of January — even though the advisors may have met their CE requirements. This proposal was met with less enthusiasm by some industry players.
Sean Etherington, president of Toronto-based Assante Wealth Management Inc., wrote, “we do not believe the advisor should be suspended for the Dealer Member’s failure to update the continuing education reporting system in a timely manner.”
Etherington also noted that the proposed suspensions would not only have the potential to punish advisors who have met their CE obligations, but also their clients.
“For example, if the [advisor] is not able to provide advice and execute transactions, the client may suffer significant financial loss,” Etherington wrote. “This unintended consequence is not in the best interest of clients.”
The Independent Financial Brokers of Canada (IFB) expressed a similar concern.
“Suspension is a hefty penalty for the advisor and also for his/her clients,” the association wrote in a submission, adding that suspensions would subject clients to “inconvenience and confusion, while exposing the advisor to great reputational risk and economic loss.”
IIROC’s proposal was silent on how an advisor would be reinstated following a suspension — an item on which the IIAC requested clarification.
Changes to the VPP questioned
IIROC also proposed amendments to its Voluntary Participation Program (VPP).
Currently, the program allows former approved persons who choose to participate in IIROC’s CE program voluntarily to extend the validity of their Canadian Securities Course (CSC) by taking a list of approved courses.
The VPP can be used to extend the validity of the CSC indefinitely, but IIROC has proposed limiting the extension to one CE cycle, among other changes. (IIROC’s CE cycles last two years.)
This proposal was welcomed by the IIAC, but Monica Jacobs, a certified financial planner with MJ Squared Consulting Inc., suggested that a one-cycle limit on the CSC extension would “penalize individuals who have moved temporarily from the IIROC platform either by choice or circumstance.”
“The fact that [those] enrolled in the VPP are proactively keeping track of their required Compliance and Continuing Education requirements at a substantial personal cost of time and money indicates a high level of commitment to maintaining competence in addition to an obvious intention to return to the IIROC platform,” Jacobs wrote in a submission.
“I can think of no other example in finance or any other industry where a qualification is removed once it has been attained, and the required continuing education is completed and annual fees paid,” she added. “The knowledge does not simply disappear when one is no longer attached to the IIROC platform.”
Jacobs also suggested that women would be affected disproportionately by a one-cycle limit to the CSC extension, noting that women often have to take time away from their careers to care for young or aging family members.
“I’m sure it is not the intention of IIROC to place barriers in the way of women returning to work, but this policy will invariably have that effect,” she wrote.
CE course provider unhappy with fees
IIROC proposed that CE participants not receive credits for repeating the same courses unless those courses have been “substantially updated.”
Learnedly Canada Inc., a Toronto-based provider of online CE material, agreed with this proposal, but said the current price structure of the Continuing Education Course Accreditation Process (CECAP), which accredits IIROC’s CE material, discourages course providers from making substantial updates to course material.
In a written submission, Learnedly founder John Waldron said substantial updates to a course require the course to be re-accredited, rather than re-certified. Citing CECAP’s course review fees, Waldron claimed the cost of re-accrediting a course is “46% to 287% higher than the cost to re-certify a course with no material changes.”
“This fee structure discourages course providers from updating accredited content in favour of leaving courses unchanged,” Waldron wrote.
IIROC did, however, suggest that CE participants be allowed to repeat certain approved ethics courses in different CE cycles and still receive credit.