Pursuant to subsection 22(1) of the Financial Services Regulatory Authority of Ontario Act, 2016 (the FSRA Act), the Financial Services Regulatory Authority of Ontario (FSRA or the Authority) is proposing Rule 2020-001 – Financial Professionals Title Protection (the FPTP Rule) under the Financial Professionals Title Protection Act, 2019 (FPTPA).
On August 13, 2020, FSRA posted for a 90-day comment period a Notice and Request for Comment on the proposed FPTP Rule (the Original Notice). Based on comments received, FSRA is proposing amendments to the proposed FPTP Rule, as set out in this Notice and the revised FPTP Rule (Appendix A ).
With this Notice, FSRA is seeking public comment on the revised FPTP Rule in accordance with section 22 of the FSRA Act. Interested persons are invited to make written representations to FSRA with respect to the revised FPTP Rule by June 21, 2021.
FSRA has also posted for public comment proposed guidance with respect to FSRA’s supervision approach and its approach to administering applications under the FPTPA.
FSRA has included an overview of the proposed structure for the collection and remittance of FP/FA fees, as outlined in Appendix B of this Notice. FSRA will issue a separate consultation on the proposed fee structure in the coming months.
FSRA has also posted the consultation summary report, which provides a summary of the feedback and comments received during the 90-day comment period and FSRA’s responses.
FSRA’s goal for implementing the FP/FA title protection framework is to mitigate consumer confusion and provide confidence to consumers and investors that the individual with whom they are dealing is qualified to provide financial planning or advisory services.
FSRA will achieve this by implementing a fair and flexible framework that leverages existing regimes for granting and supervising financial planning and advising designations and licences, to ensure that individuals using the FP or FA titles meet minimum standards.
To support the work on the design of the title protection framework, FSRA commissioned a consumer research survey in fall 2020. The purpose of the survey was to gain further insights on Ontario consumers’ expectations and knowledge regarding individuals who currently hold themselves out as FPs and FAs.
The survey findings support FSRA’s approach to implementing the framework, as well as the minimum standards for approval of a credentialing body (CB) and FP/FA credentials, as outlined in the proposed FPTP Rule and associated guidance. In particular:
- 86% of consumers agreed that there is a need for minimum standards for the use of the FP and FA titles.
- 56% of respondents assumed that FP and FA title users currently hold credentials regulated by a government regulator.
- 81% of consumers consider ongoing / up-to-date training and specific education in finance as most important in their final decision when hiring an FP or FA.
Appendix C provides additional detail on FSRA’s consumer research survey.
Overall, FSRA’s first consultation on the proposed FPTP Rule and associated guidance confirmed that stakeholders strongly support the implementation of a title protection framework for FPs and FAs in Ontario. Stakeholders also expressed positive feedback on FSRA’s consultation process and proactive engagement during the consultation period. However, a number of concerns and questions were raised and are addressed in the Summary of Comments and FSRA Responses.
Substance and purpose of the proposed rule
The proposed FPTP Rule outlines the parameters for the implementation of the FP/FA title protection framework and establishes:
- approval criteria for credentialing bodies to ensure the effective administration of a credentialing program and that only qualified individuals are issued a credential;
- 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.
The associated Guidance provides additional detail on FSRA’s supervision approach and the administration of applications under the FPTPA and the proposed FPTP Rule.
Summary of written comments received
FSRA received 43 written submissions on the proposed FPTP Rule during the 90-day comment period. A list of those who provided comments is outlined in Appendix D .
At a high level, stakeholders provided comments on the following topics:
- Regulatory Effectiveness and Efficiency – concerns about the potential for the framework to introduce additional burden and duplicative oversight, particularly in relation to the monitoring activity that will be undertaken by credentialing bodies.
- Transition Periods – concerns with respect to the proposed transition periods being too long and the level of oversight of individuals who would benefit from them.
- CB Approval Criteria and Ongoing Duties – comments about FSRA’s approach to approving multiple CBs and concerns about conflicts a CB may have in its role supervising title users and its other functions (e.g., lobbying, advocacy, etc.).
- FP/FA Baseline Competency Profiles – concerns that the profiles do not provide sufficient direction or guidance on which credentials will be approved for title usage.
- Disclosure – support for title users to disclose the approved credential which grants them permission to use the FP/FA titles.
- Titles That Could Reasonably be Confused with FP/FA – concerns that FSRA’s approach in relation to title regulation is too limited in scope and should include titles such as “wealth manager” and “financial consultant”.
- Harmonization with Other Canadian Jurisdictions – FSRA should work with other jurisdictions to ensure a harmonized title protection framework is implemented across Canada.
- Enforcement – concerns that FSRA’s enforcement powers under the FPTPA are not sufficient.
- Exemptions – some comments that exemptions should be made available for certain groups of individuals, such as those registered with the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). Alternatively, several stakeholders recommended that exemptions not be made available for both FP and FA title use.
- Fees – requests for further detail on the proposed fee framework and concerns that fees will be too high. See Appendix B for additional information on FSRA’s approach to establishing the FP/FA fee structure.
- Consumer Education – strong support for greater educational material and consistent messaging, both of which are seen as being key to the success of the framework.
- Public Registry – a number of suggestions that FSRA house a public registry of approved credential holders in Ontario.
- Additional comments relating to conduct oversight, fiduciary standards and technology.
A more detailed summary is provided in the Summary of Comments and FSRA Responses. The Original Notice also requested feedback on five questions with respect to the implementation of the framework. FSRA responses to the comments received with respect to these questions are also included in the Summary of Comments and FSRA Responses.
Summary of changes
FSRA proposes to make two amendments to the proposed FPTP Rule.
1. Shorten the transition period available for individuals who used an FP or FA title immediately prior to January 1, 2020, and up to the date the proposed FPTP Rule comes into force.
In response to the consultation, several stakeholders commented that the proposed transition periods are too long and recommended that they be shortened. Stakeholders commented that shortening the period in which individuals who do not hold an approved credential can use either the FP or FA title would support consumer protection objectives. In response to these comments, FSRA is proposing to shorten the transition periods to four years for FP title users and two years for FA title users.
FSRA’s view is that the revised transition periods would still allow sufficient time for individuals who are already using the FP/FA titles to obtain an approved credential, if required, and for potential credentialing bodies to apply and obtain approval under the FPTPA.
Shortened transition periods are also consistent with FSRA’s consumer protection objectives for the FP/FA title protection framework. Shortening the amount of time that individuals who do not hold an approved credential can use the FP/FA titles will mitigate the potential for misuse/abuse of titles.
2. Add a new subsection 4(5) to require approved credentialing bodies to provide the CEO with the information posted on their websites pursuant to subsection 4(4).
Requiring approved credentialing bodies to provide the information posted on their websites would permit FSRA to develop a consolidated public registry, addressing several comments raised during the consultation period. The proposed change also aligns with the findings from FSRA’s consumer research survey (see above), in which 60% of individuals who participated stated that they would prefer to have a single source to verify whether individuals are qualified to use the FP and FA titles in Ontario. FSRA’s view is that a consolidated public registry would provide enhanced consumer confidence in the title protection framework. A consolidated public registry would provide a central location for consumers to verify the credentials of individuals who use the FP or FA title in Ontario. It would also help advance the professionalism of the sector and strengthen the brand value of the FP and FA titles. The timing and manner of providing the required information would be specified in terms and conditions imposed on an approved credentialing body pursuant to subsection 4(3) of the FPTPA.
Authority of the FPTP Rule
The following statutory provisions give FSRA authority to make the Proposed Rule:
- Subsection 21(1) of the FSRA Act authorizes FSRA to make rules in respect of any matter over which a statute gives FSRA rule-making authority.
- Paragraph 1 of subsection 15(1) of the FPTPA authorizes FSRA to make rules respecting the meaning of “good standing” for the purpose of sections 2 and 3 of the FPTPA.
- Paragraph 2 of subsection 15(1) of the FPTPA authorizes FSRA to make rules establishing criteria for credentialing bodies to be approved under section 4 of the FPTPA, including, without limitation, criteria relating to:
- the applicant’s governance structure and practices; and
- disciplinary processes the applicant must have in place for individuals holding approved credentials it has issued.
- Paragraph 3 of subsection 15(1) of the FPTPA authorizes FSRA to make rules establishing criteria for credentials to be approved under section 7 of the FPTPA, including, without limitation, criteria relating to:
- educational requirements;
- examination requirements;
- codes of ethics and professional standards; and
- continuing education requirements.
- Paragraph 4 of subsection 15(1) of the FPTPA authorizes FSRA to make rules governing applications for approval.
- Paragraph 5 of subsection 15(1) of the FPTPA authorizes FSRA to make rules governing approved credentialing bodies.
- Paragraph 7 of subsection 15(1) of the FPTPA authorizes FSRA to make rules respecting approved credentials.
- Paragraph 8 of subsection 15(1) of the FPTPA authorizes FSRA to make rules respecting transitional matters arising from the enactment of Schedule 25 to the Protecting What Matters Most Act (Budget Measures), 2019, including the treatment of credentials and other qualifications possessed by individuals before sections 2, 3, 9 and 10 of the FPTPA come into force.
FSRA has not relied on any significant unpublished study, report, decision, or other written materials, other than internal reports prepared by FSRA management for the FSRA Board of Directors.
FSRA considered the submissions received during the comment period on the proposed FPTP Rule as alternatives. All comments were taken into account and weighed against the principles of the title protection framework and FSRA’s purview with respect to administering and enforcing the FPTPA.
Anticipated costs and benefits
The proposed FPTP Rule changes would continue to support FSRA’s implementation of a framework that provides for consumer confidence and regulatory effectiveness and efficiency.
A shortened transition period lessens the potential for consumer confusion while still providing industry with flexibility and time to comply with the FPTPA.
The proposed requirement to provide FSRA with information for a consolidated public registry is a direct response to comments received during the comment period and would provide consumers with a central database to confirm whether a FP/FA title user holds an approved credential. In addition, the requirement for credentialing bodies to provide FSRA with the necessary information to maintain a consolidated public registry would strengthen consumer confidence in the framework by providing a central database for credential verification.
Regulations to be Revoked
FSRA is not currently making any recommendations with respect to the amendment or revocation of a regulation or provision in a regulation that relates to the implementation of the proposed FPTP Rule.
Text of revised rule
For the text of the revised FPTP Rule, please see Appendix A .
Interested parties are invited to make written representations with respect to the revised FPTP Rule. Submissions received by June 21, 2021 will be considered.
Submissions should be submitted through the submission system on FSRA’s website.
Under the FSRA Act, FSRA is required to make all written representations publicly available. As a result, all submissions received will be posted on FSRA’s website in a timely manner.
 FSRA commissioned Forum Research to conduct an online survey with a random sampling of 800 - 1,000 Ontario respondents over the age of 18.
 Assuming seven (7) approved CBs, approximately 81,000 credential holders and an estimated $1.1M in annual regulatory costs. Estimated total fees are included as illustrative examples only.
 Assuming seven (7) approved CBs, approximately 81,000 credential holders and an estimated $3.1M in start-up costs. CBs’ estimated portions of start-up costs are included as illustrative examples only.