FCAA – The Financial Planners and Financial Advisors Act – Notice of Proposed Regulations and Request for Further Comment
The Financial and Consumer Affairs Authority of Saskatchewan released revised draft regulations for its local rules relating to title protection. The original draft regulations were based on Ontario’s framework but in response to comments the FCAA is consulting on changes that would de-harmonize some of those requirements. Similar to Ontario, the FCAA regulations would require approval for credentialing bodies (“CBs”) and their financial planner / financial advisor credentials in order for a person to be permitted to use the title of financial planner or financial advisor. The FCAA is consulting on potentially changing the baseline competency profiles for the financial advisor credential to be closer to that of a financial planner. The new language would require a broader expertise when providing suitable recommendations to a client and thus would require a financial advisor credential to have educational requirements related to estate planning, tax planning, retirement planning, investment planning, finance management and insurance and risk management. As a corollary, the FCAA has asked whether the transition periods for FAs should be extended to match those of FPs (4 years from the date the regulation comes into force).
Feedback is also being sought on the proposed fee schedule, as well as the process the FCAA should follow for transitions in circumstances where the approval of a CB or the operation of a CB ceases. Questions are also posed with respect to whether the transition date (the date by which persons would have had to be actively advising clients in order to utilize the transition periods) should be moved up from July 3, 2020 to a date closer to when the regulations are in force.
Overview of the Council’s Comments:
The CAC is strongly supportive of a title protection framework to deal with issues of unregulated titles and credentials used by individuals providing or purporting to provide financial services and advice. The FCAA must implement strong criteria for both credentialing bodies and the financial planner/advisor credentials to ensure strong, uniform minimum standards for title users. It is critical that any title protection framework be harmonized with and supportive of proficiency and conduct regulation, such as securities and insurance regulation.
Some of the proposals contained in the Consultation will result in decreased harmonization with Ontario’s title protection legislation. The CAC strongly believes that it should be an overriding priority in this instance to create a strong investor-centric framework with stringent minimum standards for expected knowledge and competencies. Baseline competencies need to be created for both the financial planner and advisor titles that best serve the public interest as their primary objective.
We urge the FCAA and other regulators to consider the intersection of this regulation with the requirements already set out by securities regulators and SROs, otherwise the title protection framework may merely duplicate the existing proficiency/credentialing requirements and are likely to result in increased regulatory burden that does nothing for the public interest.
The CAC does not believe there will be many (if any) circumstances where it would be appropriate to allow an individual to continue to use a protected title in the absence of oversight by a credentialing body. Given the fast-paced nature of change in the financial industry, it is important that financial planners/advisors hold current, active credentials, and are subject to continuous and robust conduct oversight.
Mandatory disclosure of a title holder’s credentials and an explanation of those credentials should be the minimum requirement, and can be similar to the requirements placed on securities registrants in their relationship disclosure documentation. The proposed enhanced disclosure requirement is warranted to help alleviate the consumer confusion that currently exists with respect to the standards required to use the title of a financial advisor. Further, credential holders should also have to explain in plain language to their clients any limitation on the scope of their product knowledge or regulatory authorizations.
While we remain disappointed that there has not been a greater attempt in other jurisdictions to ensure that title protection frameworks are complementary and additive to existing securities and insurance regulation, we applaud the FCAA for their consideration of these intersections in the pursuit of the public interest and efficient regulation.