: Ontario Pension Board - Submission

Via email to Fin.Adv.Pin@ontario.ca

June 17, 2016

Expert Committee to Consider Financial Advisory
and Financial Planning Policy Alternatives
c/o Frost Building, Room 458
4thh Floor, 95 Grosvenor Street
Toronto, Ontario M7A 1Z1

Dear Ms. Anand and Messrs. Heins, Bates, and Haber,

Re: Financial Planning/Advice Consultation

This letter is in response to the Preliminary Policy Recommendations of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives published by the Ministry of Finance on April 5, 2016 and a follow-up to our presentation to the Committee on June 2, 2016. OPB provided comment on the Committee's initial consultation document in a letter dated September 21, 2015. We also previously commented on this topic at the January 10, 2014 stakeholder roundtable discussion as well as through written submissions to the Ministry of Finance dated February 11, 2014. We thank the government for giving us the opportunity to respond to its preliminary policy recommendations.

OPB is the administrator of the Ontario Public Service Pension Plan (PSPP}, a defined benefit pension plan sponsored by the provincial government. Our membership consists of certain employees of the Government of Ontario and its agencies, boards and commissions. With $23 billion in assets, 42,105 members, 36,220 reti red members, and 6,037 former (deferred) members, the PSPP is one of Canada's largest pension plans.

In our role as pension plan administrator, we have direct contact with the retail wealth management industry. At OPB, we also offer an Advisory Services program that provides our clients personalized financial advice at critical milestones, such as termination or retirement, and ensures members, former members, and retired members understand how the pension decisions they make will affect their personal financial picture in retirement.

We were encouraged to see that the Committee's preliminary policy recommendations call for increased regulation of Financial Planning and Financial Product Sales and Advice in Ontario. In the interest of full disclosure, please note that I currently hold the position of Public Director of the Board of Directors of the Financial Planning Standards Council (FPSC}. OPB supports my position on the Board of FSPC in part because our organizations align in our belief that further regulation in the industry is necessary. We offer additional comments on the Committee's preliminary policy recommendations below from our perspective as a pension plan administrator.

Regulation of Financial Planning in Ontario

We were pleased to read the Committee's recommendation that regulation should be required of any individual who, or firm that, provides Financial Planning services either expressly or implicitly through Holding Out by way of titles, described services or otherwise. Such regulation is needed to alleviate the confusion consumers face in determining the qualifications and interests of those offering their services under a variety of titles and designations.

On this point, we agree with the remarks made by FPSC to the Committee on May 3, 2016; we believe the most effective way to alleviate this confusion is to regulate the use of titles and holding out, rather than Financial Planning activities themselves. We believe codifying strict competence and ethical standards and establishing a body to enforce these standards will deliver the consumer protection the Committee is seeking to provide. Further, by placing regulatory focus on the credentialing ofthose holding themselves out as financial planners, Financial Planning is treated as the profession that it is.

We see the recommendation that those who provide Financial Planning services and whose Financial Product Sales and Advice activities are already overseen by a regulatory body should be regulated by that same body or bodies as problematic. While we agree that avoiding regulatory duplication is a worthy aim, we do not believe that having several different bodies regulating the same area meets that aim. We do not believe that consistent regulation can be achieved when spread over several entities. Further, these bodies are experts in their respective fields of oversight and do an excellent job of regulating the specific transactions and consumer interactions in those areas; however, these bodies are not experienced in overseeing the profession of Financial Planning and do not have an understanding of the knowledge, skills and abilities required of financial planners. This applies similarly to the proposed Financial Services Regulatory Authority (FSRA), which the Committee has recommended be the body to oversee those providing Financial Planning services and not currently overseen by a regulatory body. We believe it is disadvantageous to all parties to require these bodies to regulate financial planners, particularly to consumers, who are the ultimate users of these services.

We believe there already exists a body perfectly suited to oversee all individuals holding themselves out as financial planners, including those whose Financial Product Sales and Advice activities are otherwise regulated. That entity is FPSC, which currently oversees over 9,000 Certified Financial Planners {CFPs) in Ontario. FPSC recognizes that Financial Planning is a profession and should be regulated accordingly. A not-for-profit self-funded organization, FPSC grants the CFP certification to those meeting its qualifications and ensures their activities comply with the rigorous standards they have in place. In this way, FPSC is able to ensure that everyone using the title of CFP is a competent financial planner who meets high ethical standards. Its disciplinary and enforcement processes further instill confidence in the title of CFP. We believe consumers can have greater confidence in FPSC's regulation, as compared to the existing regulatory bodies, because FPSC's focus is on the provision of exceptional Financial Planning advice and not on Financial Product sales. FPSC's extensive knowledge and experience in Financial Planning and in enforcing strict client-first standards would be invaluable in establishing effective regulation.

Harmonization of Standards

We agree with the Committee's recommendation that individuals providing Financial Planning services should be subject to one set of regulatory standards. We recommend that these standards mirror those already in place for CFPs. Codifying these well-established standards would provide a basis for effective regulation. It would further avoid the unnecessary challenges and the significant time and resources that would be required by the Committee's recommendation that the Regulators of the various financial services sectors work cooperatively to develop and harmonize a set of regulatory standards.

Titles and Holding Out

As discussed above, we agree that the use of titles in the provision of Financial Product Sales and/or Financial Planning should be prescribed. We believe such a step is vital to lessening the confusion consumers face as they seek financial assistance and which often puts them at a disadvantage. We strongly recommend that individuals holding themselves out as a "Financial Planners" (or a similar title) be required to fulfil the current requirements for the CFP certification.

Statutory Best Interest Duty

We fully support the Committee's recommendation that a Statutory Best Interest Duty be adopted and applied to all those providing Financial Planning services and/or Financial Product Sales and Advice. We believe such a duty is imperative if regulation is to truly protect consumers. We agree with FPSC's recommendation that the Committee work with the Canadian Securities Administrators to harmonize recommendations on this issue across Canada. We appreciate the opportunity to provide feedback on the Committee's preliminary policy recommendations and we look forward to its final report. If you would like to discuss anything covered in this letter, please contact me directly at 416-601-4050 or at peter.shena@opb.ca.

Sincerely,

Peter Shena
EVP and Chief Pension Officer