The Ontario government says it is closer to creating its new financial services regulator, the Financial Services Regulatory Authority, and tougher standards for advisors.
The 2017 provincial budget plan, released Thursday, says the government is moving ahead on financial advisor titles reform and a possible statutory duty to act in clients’ best interests.
“Over the coming year, the government intends to work with its regulatory partners to close the gap that currently allows financial planners to perform their valuable work without regulatory oversight or specified proficiency requirements,” the budget says.
Finance minister Charles Sousa said best interest duties are used in jurisdictions around the world. “Many of them apply [it]. We recognize there’s some apprehension by some, with regards to what that means in hidden fees and so forth by financial planners and advisors. We’re working with them. We’re taking the necessary steps to protect consumers in the end,” Sousa told reporters. “It’s all about consumer protection and investor protection.”
The budget says the Finance Department is still considering the recommendations of an expert committee it appointed to study Ontario’s financial planning and advice regulation. The committee recommended a “universal statutory best interest duty,” titles reforms, and that the mandates of the OSC and new FSRA be broadened to regulate financial advice.
The budget said the government expects to appoint a board for the FSRA this spring, and introduce legislation “toward the end of 2017” that would deal with the body’s mandate, as well as the powers of the related Financial Services Tribunal. FSRA will replace the Financial Services Commission of Ontario.
The government will “curb consumer confusion by working with regulators to restrict the use of titles related to financial planning,” the budget says.
The government will also respond to the recommendation to create a “central registry” of financial planners and advisors. Further, the provincial government “intends to examine the feasibility of a universal statutory best interest duty in Ontario,” and is working on the issue with the province’s regulators, the budget says.
Sousa said he wants to see financial advisor standards advance with the push for the national Cooperative Capital Markets Regulatory System. “We’re looking forward to moving that yardstick [on CCMR] even more, to include some standardization as well as [an] understanding of what a financial advisor is. [These] are actually professional designations,” Sousa said.
While the CCMR “may require more time,” given other governments are involved, Sousa said he would like to see Ontario’s reforms under the FSRA finished before the next provincial election.
The budget reiterated Sousa’s commitment to give self-regulatory organizations the power to collect fines through the courts.