Financial Planning Standards Council. IIROC Notice , Dealer-Member Rules Use of Business Titles and Financial Designations

Transcription

1 Financial Planning Standards Council IIROC Notice , Dealer-Member Rules Use of Business Titles and Financial Designations March 2013

2 March 2013 Care of: Ms. Rossanna Di Lieto Vice President, Registration, Complaints & Inquiries Investment Industry Regulatory Organization of Canada Suite 200, 121 King Street West Toronto, ON M5H 3T9 Mr. Joe Yassi Vice President, Business Conduct Compliance Investment Industry Regulatory Organization of Canada Suite 200, 121 King Street West Toronto, ON M5H 3T9 Dear Ms. Di Lieto and Mr. Yassi: Financial Planning Standards Council (FPSC ) is pleased to provide comments on the IIROC Notice , Dealer-Member Rules Use of Business Titles and Financial Designations. FPSC offers a unique voice to this dialogue as a national not-for-profit organization whose purpose is to instill confidence in the financial planning profession by establishing, enforcing and promoting appropriately high standards for certification of financial planners. Since 1995, FPSC has been assessing and certifying financial planners against established standards of competence, ethics and performance to ensure those certified by us are qualified to provide competent and ethical financial planning advice to Canadians. Over the past 15 years we have developed, executed and refined a rigorous certification program for financial planners based on the standards that we have set through consultation with Canadians, industry, educators and financial planners themselves. We continue to develop and enforce standards for the financial planning profession through our multi-tiered CERTIFIED FINANCIAL PLANNER /CFP certification program. Our program includes: An extensive, comprehensive educational requirement administered independently by over 30 public- and private-sector institutions across Canada;

3 Two levels of national standardized examinations administered by FPSC; The completion of a comprehensive financial plan through a Capstone Course requirement (established by FPSC and delivered in partnership with the academic community); A three year practical work experience requirement; and Required adherence to a rigorous set of Standards of Professional Responsibility, which includes a Code of Ethics, Rules of Conduct, Standards of Practice and Fitness Standards. Currently, there are over 17,500 CFP professionals in good standing with FPSC, in every province and territory across Canada. Proposals to Improve Guidance Note Issue of Titles Choosing the proper financial practitioner remains a daunting task for many Canadians. They are disadvantaged when seeking out financial advice given that titles used by advisers and dealers are generally not restricted and often do not reflect the competencies or primary function of the role, nor are there any restrictions on holding out as offering financial advice or financial planning. This problem is exacerbated by an alarming trend within the industry where it has now become common to claim to offer financial advice or financial planning as a marketing tool to attract investors when the primary purpose of the relationship is to sell products. There are no safeguards to hold those who claim to be financial planners or financial advisers (or those who claim to offer financial planning or financial advice in general) accountable for the corresponding service they purport to provide to the public. Without restrictions regarding the use of titles based on clearly defined roles that apply equally to all financial practitioners across all sectors and jurisdictions, consumer confusion and misalignment of expectations will continue to pervade the industry. Titles such as financial planner, and even financial adviser, imply to consumers a higher degree of expertise than the limited knowledge, skills and abilities currently required under the product-based regulatory structures that exist today.

4 Specific Recommendation Specific Recommendation To ensure Canadians receive the scope, level and quality of advice they deserve, titles such as financial planner and any related such titles should be restricted. The restriction of these titles should not be left to the judgment of individual firms, but should only be accorded to individuals who have met independent, industryaccepted standards such as the CFP designation. These standards include having been assessed against clearly defined competencies that is, knowledge, skills, and judgments that go with appropriate qualifications and resulting certifications or designations. Further, mechanisms must be created so that any such restrictions are determined by (an) organization(s) expert in the competencies required, expert in establishing appropriate standards for such individuals, and expert in certifying against those standards. These established criteria should then apply equally to individuals working in various sectors across multiple jurisdictions. Such determinations should not be left to the product regulators or securities SROs independently. Designations Until the issue of titles and holding out restrictions are dealt with, we support IIROC s efforts in preparing a glossary of common financial designations for the benefit of consumers. In the absence of necessary far-reaching title and holding out restrictions, the glossary can serve as an effective tool for consumers seeking additional information about the skills and qualifications for their adviser. To ensure the glossary is meaningful however, and to provide greater clarity, each designation listed should include a score card that reflects whether or not it possess appropriate and necessary rigour based on the following six criteria outlined in your proposal: 1) A rigorous curriculum; 2) An emphasis on ethics (including the duty/loyalty of care owed); 3) A continuing education (continuous professional development) requirement; 4) A method for determining the individual s current status regarding the designation;

5 5) A public disciplinary process/oversight; and/or 6) Been issued by a reputable and/or accredited organization. In this manner, consumers can assess the level of competence they would like to see in their financial practitioner. The process of obtaining designations and the competencies required vary tremendously. Those such as the CFP certification are based on clear knowledge, skills, abilities and judgements, and require a high level of competence and ongoing adherence to professional standards, while at the other end of the spectrum, some so-called designations are obtained through attendance at a weekend seminar and the completion of a self-administered test. Specific Recommendation In the absence of broader title and holding out restrictions, the creation by IIROC of a glossary of financial designations can provide consumers with a useful tool to better understand commonly used designations and what they represent. To be meaningful, designations listed in the glossary should be measured against the six considerations outlined in the guidance document, which can help consumers to compare and contrast the designations that various financial practitioners hold.