Financial Professionals Title Protection Framework Application and Supervision Guidance Consultation Summary Report

Some commenters raised concerns about the potential for various credentialing bodies (CBs) to interpret and implement the general expectations outlined in Guidance differently from one another; potentially leading to divergent CB standards.

One stakeholder suggested that FSRA should engage in further consultations on the Guidance documents to clarify expectations regarding foundational elements of the regime. 

• FSRA has taken a principles-based approach to drafting the FPTP Rule and the criteria outlined in the Application Guidance.
• This approach provides flexibility for the diverse landscape of existing designation and/or licence granting bodies in order to meet the relevant approval criteria.
• The Guidance documents are meant to provide prospective credentialing bodies (CBs) with the minimum requirements FSRA is looking for in order to issue an approval. FSRA will work with prospective CBs to clarify expectations, when and if necessary, as part of the application review process.
• FSRA will ensure that each approved CB operates according to the minimum standard, ensuring that consumers can be confident in the approved CB.
• A rigid and prescriptive approach to requirements could reduce the number of CBs offering a wide variety of credentials, and thereby adversely impact the framework.
• This approach supports FSRA’s objective by providing choice and flexibility for individuals wishing to use the Financial Planner (FP) and Financial Advisor (FA) titles.
• The guidance documents will be reviewed on a regular basis (at least once every three years). If necessary, FSRA will amend the contents to provide additional context, clarity and/or new elements as it gains more experience regulating the sector.

Most stakeholders generally support FSRA’s inclusion of a “client’s interest first” requirement as part of a CB’s code of ethics and professional expectations. 

A stakeholder suggested FSRA should clarify that putting the “client’s interest first” is an overarching requirement in all aspects of the client relationship and that the standard must not be limited to specific scenarios such as those only involving conflicts of interest or suitability determinations. 

Some commenters noted that the term “client’s interest first” is often used to refer to a fiduciary duty or a best interest duty and asked FSRA to clarify if the requirement being introduced goes beyond making a recommendation. 

One stakeholder expressed concern that CBs may interpret “client’s interest first” as a new conduct standard, which oversteps their mandate and encroaches on the regulatory authority of securities regulators and/or other relevant federal regulatory bodies.

One commenter suggested that FSRA should consider replacing the “client’s interests first” terminology with a requirement to put a “client’s interest ahead of their own.” This terminology would align with the Fair Treatment of Customers (FTC) Guidance issued by the Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO). 

One stakeholder suggested that the requirement should be amended to read: “CBs must develop a code of ethics which includes a requirement that credential holders deal with clients competently, professionally, fairly, honestly and in good faith.” 

• The FPTP Rule requires that an individual using an approved credential “deal with the individual’s clients competently, professionally, fairly, honestly and in good faith”.
• FSRA believes that part of meeting that standard of care is to prioritize (i.e., “put first”) the interests of a client whenever preparing a financial plan or providing financial advice.
• The wording is not intended to change, in any way, the standard of care set out in the FPTP Rule.
• The capitalized term “Code of Ethics” was removed to avoid possible confusion.

A couple of stakeholders provided the following comments with respect to FSRA’s approach for the Terms of Approval with approved CBs:

• agree with FSRA’s approach to impose terms and conditions on a CB. However, with the exception of minor deficiency, suggest FSRA not approve a CB if a suitable application is not received
• for the sake of transparency and consumer disclosure, recommend FSRA post the terms and conditions for CBs that have been approved preliminarily but are in the process of complying with all the CB approval requirements or if there are any subsequent deficiencies that must be remediated as a result of an examination
• to ensure consumer protection, the public should be informed if an approved CB or its credential(s) no longer meet the requirements under the framework or have been flagged for potential deficiencies or required corrective action by FSRA

• Under the FPTPA, FSRA has the authority to impose terms and conditions on the approval of a CB or FP/FA credential.
• Terms and conditions imposed at the time of approval are primarily intended to provide more detail and certainty with respect to requirements set out in the FPTPA and the FPTP Rule. They are not intended to facilitate lesser standards.
• FSRA intends to post the approval and any applicable terms or conditions. If a term and condition has been imposed subsequent to approval, it will also be posted.

A commenter asked FSRA to clarify if it expects prospective CBs to have information sharing agreements in place as part of their application or if FSRA’s expectation is that CBs pursue actual information sharing agreements with other CBs after they have been recognized by FSRA.  

• FSRA expects applicants to describe the processes and procedures they will put in place to share information with other approved CBs and/or regulatory bodies.

A stakeholder recommended FSRA clarify whether CBs should update their course content on or before any new legislative or regulatory requirements come into effect.

• In the event of any potential changes to the minimum standard for title use under the title protection framework, FSRA will provide approved CBs sufficient time to update their course content to meet the implementation of new requirements.

Stakeholders were supportive of the additional detail provided in the Supervision Guidance with respect to FSRA’s approach to supervising approved CBs and monitoring individuals using the FP or FA title without an approved credential. 

Several commenters also supported FSRA’s proposed risk-based approach to examinations of approved CBs and noted the identified risk factors that may trigger such an examination are appropriate. 

The following feedback was also submitted for FSRA’s consideration:

• suggest enhancing the proposed Supervision Guidance by specifying that FSRA examinations of CBs will include a review of the CB’s enforcement record
• recommend that the updated Supervision Guidance be further amended to include periodic on-site reviews as part of FSRA’s supervisory program
• recommended harmonizing the process of filing the Annual Information Return (AIR) with other jurisdictions with similar title protection frameworks

• FSRA’s supervision program is designed to monitor approved CBs to ensure they remain in compliance with the FPTP Rule, the FPTPA, and any terms and conditions of approval.
• A risk-based approach to conducting examinations of approved CBs increases the effectiveness of supervision by enabling supervisory outcomes to be met while increasing efficiency through improved process and resource allocation.
• FSRA will utilize various tools in order to conduct examinations. Depending on a CB’s risk rating, FSRA may select a CB for an examination which may consist of, but is not limited to:
  • document(s) review
  • meeting with senior management and board
  • off-site desk review or 
  • on-site reviews
• A CB’s supervisory and disciplinary process is a key element in its operation as a CB. FSRA’s supervision program will ensure that an approved CB’s supervisory and disciplinary processes continue to meet the minimum standard.
• FSRA will engage other Canadian jurisdictions with similar title protection frameworks to discuss how regulatory supervisory and compliance processes could be harmonized to reduce potential burden on CBs.

A stakeholder noted it would be important that CBs actively screen candidates to ensure that individuals who have, for example, lost their life licence do not rebrand themselves as FAs and continue practicing. 

One commenter requested FSRA clarify how far back a credential holder’s disciplinary history needs to be captured on its public registry. 

• In order to obtain approval, CBs must demonstrate they have proactive monitoring processes and the necessary procedures to ensure that approved credentials are only granted to and/or held by individuals deemed suitable. FSRA expects this would include a status review of a prospective or existing credential holder’s other licences/designations.
• In order to obtain approval, CBs must demonstrate they have a public listing of current and former credential holders, including disciplinary information.
• FSRA recommends that the entire disciplinary history of a credential holder be available to the public. However, FSRA understands that this may present administrative or operational challenges for CBs that may not have historical information available electronically or that may have to create a new registry to meet the minimum standard.
• FSRA will assess on a case-by-case basis to ensure a CB meets FSRA’s minimum standard for approval.

Stakeholders generally support FSRA’s proposed new standard for approved CBs to provide complainants information on alternate options when making a complaint against a credential holder who also holds a licence/registration with a regulatory body or credential with another approved CB.  

The following feedback was also submitted for FSRA’s consideration:

• to ensure consistency, clarity, and accuracy in communication, recommend FSRA provide CBs with the information it expects to be disclosed in a standardized manner so that it can be consistently and accurately shared with complainants
• the new disclosure requirement of alternate complaint handling options should be in plain language not to overwhelm to otherwise deter the consumer from acting
• suggest FSRA include the following language in the information provided to complainants: “where a FP/FA does not carry Errors & Omissions (E&O) insurance and is not licensed, there is no recourse in the event of a complaint”

A stakeholder suggested that FSRA should ensure the following minimum requirements are met by a prospective CB with respect to the CBs complaint handling process:  

• the CB’s complaints process must be fair and transparent
• the process must be easy to find and accessible (e.g., free to use, available in multiple languages, prominently posted on their website, etc.)
• the CB should also provide assistance if needed to help a complainant navigate the process
• the complaints process must be timely and efficient
• the process must produce final decisions that bring closure to the complaint

A commenter suggested that FSRA should also accept complaints directly from consumers who are dissatisfied with the result achieved via the CB complaint process.  

Another stakeholder suggested additional clarity regarding which complaints FSRA will adjudicate, including whether a complaint filed by a member of the public against a credential holder will be dealt with by FSRA and the CB or whether it will be directed to the CB to handle on its own.

A commenter encouraged FSRA to engage in a public education and awareness-raising campaign about the regulation of the FP and FA titles and how to report complaints.

One stakeholder suggested it is in the consumer’s interest for complaints involving life and health insurance products to be directed to insurance companies to avoid the layering of complaint processes across organizations and potentially increase the time it takes to reach a resolution or to add costs for consumers.

• FSRA will review a CB’s enhanced disclosure to see if it is presented to consumers in a clear, consistent and accurate manner. FSRA will also review to see if the options presented reflect the diverse landscape of registered / licensed individuals and the various avenues for redress.
• When reviewing a CB’s complaint handling process, FSRA will review to see if it is accessible, fair, timely, transparent and effective.
• As part of the annual information return (AIR), FSRA will also require CBs to provide statistical data and other information with respect to complaints and enforcement activity, and information on how it continues to carry out its ongoing responsibilities as an approved CB.
• The Supervision Guidance outlines the types of complaints FSRA has the authority to investigate. This includes complaints relating to the processes and procedures of an approved CB or individuals who use the FP/FA titles without an approved credential.
• Under the FPTPA, approved CBs are responsible for handling complaints relating to the conduct of their credential holders.
• Complaints received by FSRA against an individual who holds an approved credential will be redirected to the appropriate CB(s).
• In developing a consumer education campaign, FSRA will provide consumers with information on how to submit a complaint.
• FSRA will work with key stakeholders to develop a consumer education campaign that will ensure a consistent approach to educating consumers on submitting complaints under the title protection framework.

The following feedback was submitted for FSRA’s consideration:

• the curriculum requirements detailed in the Application Guidance are, in almost all cases, described as topics that “should” rather than “must” be included in the curriculum. Given the fundamental importance of these competency requirements, more definite language (“must” rather than “should”) is needed here to clearly establish minimum curriculum standards 
• concern that consumers could potentially be at risk if an individual without a life licence can advise on products such as life and health insurance relying on their FA credential alone
• concern that the inclusion of “identifying appropriate asset allocation” as part of the minimum standard for FA credentials returns the focus to investment planning and recommend that FA credential holders that do not have the specific knowledge and skill to perform this task fully disclose this insufficiency
• CB’s course content should make clear for FP/FA candidates the distinction between understanding retail investments and providing specific recommendations. Any unlicensed FA (or FP) should not be providing investment advice related to specific products
• the training to qualify as an FA should build on the current training required to hold a mutual fund or life licence (the FA credential program should incorporate the life licence training material)

• The Application Guidance outlines FSRA’s approach to assessing a CB’s curriculum against the FP/FA credential approval criteria set out in the FPTP Rule.
• FSRA took a principles-based approach to develop the minimum requirements for a credential’s curriculum in order to accommodate the many diverse education programs already in existence.
• Providing FSRA’s interpretation of the FPTP Rule in Guidance allows for flexibility in the approval process. Regardless of the terminology used, FSRA will ensure that only CBs that meet the minimum standards outlined in the FPTP Rule and Guidance are approved.
• The minimum curriculum standards are intended to ensure that credential holders have the appropriate technical knowledge to provide financial planning and advisory services.
• Feedback received during FSRA’s first consultation on the Application Guidance, as well as findings from FSRA’s 2020 consumer research survey, suggested that consumers expect an individual who uses the FA title to be well placed to provide investment advice.
• FSRA has aligned its minimum curriculum standards for FA title use to support these findings.
• The minimum curriculum standards are not meant to determine whether an individual should recommend or sell a product. Any activity with respect to providing advice or product sales may be subject to conduct requirements that fall outside of the title protection framework. FSRA expects that a credential holder will understand their regulatory requirements with respect to providing advice or selling a specific product.
• FSRA will accept the leveraging of existing licensing and/or designation programs as part of a CB’s curriculum in order to meet the minimum standard for FP/FA title use.

Most stakeholders supported FSRA’s decision to remove the list of examples of titles that likely would not reasonably be confused with FP and FA from the Supervision Guidance. 

One commenter sought clarification with respect to titles that could reasonably be confused with FP and FA, and if FSRA intends to review all titles in use but with an initial focus on those most similar to the FP and FA.  

Stakeholders also submitted the following feedback for FSRA’s consideration:

• recommend that the final list of titles that could reasonably be confused with FP and FA be tested and validated by focus groups of individual consumers
• FSRA should undertake consumer research on various permutations of the FA and FP titles before finalizing its approach
• there will likely be more similar and confusing titles that emerge in the future, and recommend that FSRA treat the list as dynamic, and regularly updated to include other reasonably confusing and misleading titles that may emerge

• The FPTPA introduces title protection in Ontario relating to the use of the FP and FA titles. This includes abbreviations, equivalents in another language, and titles that could reasonably be confused with the FP and FA titles.
• At the outset, FSRA will focus on titles that are very similar to FP and FA, as reflected in the Supervision Guidance.
• To ensure continued consumer protection, FSRA will monitor the market for any changes in title use brought about by implementing the title protection framework.
• As required, FSRA will consider conducting additional consumer research and providing further interpretation with respect to titles that could be considered both in and out of the scope of the framework.
• Guidance is subject to review at regular intervals (at least once every three years), and FSRA’s approach can be amended and/or enhanced to address changing marketplace expectations and trends.

Life License Qualification Program (LLQP)

A commenter suggested that any discussion with respect to “top-up” courses to enable life agents who wish to use the FA title to comply with the framework should take place through broad based consultations as the implications of any change will impact consumers across sectors.

• The Application Guidance sets out FSRA’s  expectations with respect to the minimum curriculum standards for FP and FA title use.
• All existing licences or designations, as well as credentials that leverage the Life Licence Qualification Program (LLQP), must meet the approval criteria in the FPTP Rule and the Application Guidance in order to obtain approval for title use.
• FSRA will continue to engage with the insurance industry to ensure that its approach to leveraging the LLQP and approving “top-up” credentials does not negatively impact existing life agents or create unnecessary burden.

Educational requirements and licensing in the insurance and securities sectors

A stakeholder noted that a gap exists with respect to educational rigour between the insurance and securities industry and that FSRA should initiate a comparative analysis with the assistance of an independent industry expert. 

Another commenter suggested that licensing in both the securities and insurance sectors should be harmonized as much as possible. 

Some stakeholders generally commented on their support for a harmonized approach to title use and encouraged regulators in the securities and insurance sectors to collaborate at a national level to establish mandatory, consistent and harmonized standards. 

Another stakeholder commented that proficiency requirements for all titles, including the FP and FA titles, can be set out under securities or insurance law and/or Self-Regulatory Organization (SRO) Rules, and suggested the scope of title reform should not be limited to the use of the FP and FA titles, but should mandate specific titles relating to advisor proficiency to eliminate client confusion. 

• The title protection framework is intended to address the absence of a regulatory framework for individuals using the FP and FA titles in Ontario
• The title protection framework will establish minimum proficiency, competency, and technical knowledge standards for individuals permitted to use the FP or FA titles.
• An in-depth analysis of educational standards in the insurance and securities industries is beyond the scope of the title protection framework.
• The framework will not result in a new licensing regime, and has been designed to leverage existing regulatory frameworks and licensing regimes in order to avoid duplicative and overlapping regulatory requirements for individuals who may wish to use the FP and FA titles in Ontario.