: Canadian Bankers Association - Submission

Delivered Via Email

Expert Committee to Consider Financial Advisory and Financial Planning Alternatives do Frost Building North, Room 458 4th Floor, 95 Grosvenor Street Toronto, ON M7A 1Z1

Dear Expert Committee:

The Canadian Bankers Association (CBA) works on behalf of 60 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 280,000 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada’s economy. The CBA also promotes financial literacy to help Canadians make informed financial decisions and works with banks and law enforcement to help protect customers against financial crime and promote fraud awareness.

The CBA appreciates the opportunity to provide input to the Expert Committee in response to the Committee’s initial consultation document issued on June 24, 2015 (Consultation Document). Financial planners and providers of financial advice play an important role in assisting Ontarians in meeting their financial goals, which adds greater strength and stability to the provinces economy. In order to promote consumer confidence in the financial planning and advice sector, the CBA supports regulation of individuals and entities in the sector that are currently unregulated. Such regulation needs to be carefully crafted so that it does not duplicate existing requirements applicable to those who offer financial planning and advice. We have set out detailed comments below. We also note our general support for the views expressed in the joint submission of the Investment Funds Institute of Canada and the Investment Industry Association of Canada on the Consultation Document.1

Scope and Regulation of Financial Planning

We would view financial planning services as involving the provision by the financial planner to the client of advice relating to the longer-term formulation and management of financial goals, risk management, planning of investment strategy, complex insurance needs, personal taxation, retirement financing and estate matters as well as the legal implications associated with these areas.2An individual, however, may offer advice on some subset of these matters and still hold him or herself out to the public as a “ financial planner”; such individuals should also be regulated as providing financial planning services, so as not to mislead consumers as to the implications of the “financial planner” designation. We are therefore of the view that legislation targeting those who are offering comprehensive financial plans and/or using the title of “financial planner” would provide the appropriate scope of regulatory coverage.

It is important to note that there are individuals working at a variety of financial institutions that are registered with the Mutual Fund Dealers Association of Canada (MFDA), the Investment Industry Regulatory Organization of Canada (IIROC) or subject to insurance/managing general agency regulations who may provide advice and planning on particular elements of a customer’s financial life, such as investment choices, retirement savings options or insurance options. In these instances and provided that such individuals are not holding themselves out as “financial planners”, it would not follow that the individual is providing financial planning services as the individual is not providing a complex and comprehensive financial plan that is holistic and takes more fully into account the individual’s life cycles.

Avoidance of Conflicting/Duplicative Requirements

In the current absence of a unified regulatory framework governing financial planning, any individual is able to hold him or herself out as a “financial planner” without being subject to minimum standards of competence, practice and ethics. This situation can lead to confusion for consumers that are seeking professional financial planning services. Therefore, we would support a single, streamlined set of standards that would be applicable to individuals that wish to have the title of “financial planner” and hold themselves out as such to the public, as well as those individuals who are providing comprehensive financial plans. These standards should include requirements relating to certification, continuing education, managing conflicts of interest and complaints and discipline mechanisms.

That said, we believe that such standards should be applied carefully so that they do not duplicate requirements that are already applicable to an individual under other regulatory schemes. Individuals that are registered with IIROC and the MFDA (together, the SROs), or subject to regulation as insurance agents, are already subject to a host of requirements relating to competence, practice and ethics. These individuals should not be subject to new requirements that essentially duplicate existing obligations. Further care must be taken not to introduce parallel processes for such individuals. For example, the SROs have established complaint resolution mechanisms for consumers which include investigative powers for the SROs. In the case of a complaint, it would be problematic to have a parallel resolution process running alongside that of the SRO. Generally speaking, we believe that the new financial planning authority should defer to the SROs and insurance regulators where conflict or duplication arises between existing regulations and new financial planning regulations.

The provinces of Quebec and British Columbia already regulate financial planners, and other provinces and territories may introduce similar regulation. We strongly believe in the need for regulation of financial planning to be harmonized across Canada. A unified and coherent regulatory scheme for financial planning across Canada would reduce the potential for confusion on the part of consumers.

We thank the Expert Committee for this opportunity to provide our views on the Consultation Document. Please do not hesitate to contact me with any questions regarding our comments.



1 Joint submission of the Investment Funds Institute of Canada and the Investment Industry Association of Canada. dated September21 2015. to the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives on the Committee’s Consultation Document.