The Bay Street Financial District in Toronto on Aug. 5, 2022.Nathan Denette/The Canadian Press
The Canadian Investment Regulatory Organization has been given the green light to authorize its members in Ontario to call themselves financial advisers, as the province looks to crack down on the use of professional titles.
The organization, also known as CIRO, is a newly created national self-regulatory body for people who sell securities and mutual funds. Its new role in credentialing financial advisers is set to be announced Tuesday by Ontario’s Financial Services Regulatory Authority, a provincial agency that has been spearheading rule changes in this area since 2019, when Ontario passed its Financial Professionals Title Protection Act.
CIRO has been approved under the act as a credentialing body, FSRA executive vice-president of market conduct Huston Loke told The Globe and Mail on Monday, ahead of the planned announcement. CIRO is the fifth organization to receive this approval, but it is one of the largest in terms of the number of individuals it oversees.
“By approving CIRO as a credentialing body, tens of thousands more investment professionals will be able to use the financial adviser title,” Mr. Loke said.
Until recently, in most provinces outside of Quebec, anyone could refer to themselves as a financial adviser, regardless of certification, designation or educational background.
In 2019, Ontario was the first province outside Quebec to pass legislation regulating use of the titles. Saskatchewan passed its own legislation in 2020, and New Brunswick followed in 2023.
Ontario’s Financial Professionals Title Protection Act requires anyone in the province who wants to use the title “financial adviser” or “financial planner” to obtain appropriate credentials from an approved provider, and remain in good standing.
About 100,000 people work as financial advisers across the country, although there are no legislated national standards for those who offer financial advice or financial planning for specific goals, such as retirement or a child’s education.
Of the four other industry organizations FSRA has approved as credentialing bodies since 2022, three can apply the title “financial adviser.”
Mr. Loke said FSRA had always hoped to include CIRO in the title regime, because the organization already has robust disciplinary standards, accountability and continuing education. CIRO is overseen by the Ontario Securities Commission in co-ordination with the Canadian Securities Administrators.
“This title protection framework has always been about helping retail investors access professionals and know that those professionals meet a minimum threshold for proficiency, for continuing education and for accountability regardless of the products that they sell,” he said.
FSRA-approved credentialing bodies are responsible for overseeing the conduct of their members and enforcing compliance with minimum requirements.
CIRO, which was formed last year from the amalgamation of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada, oversees about 47,000 financial professionals in Ontario. The organization first announced it was looking for approval to become a credentialing body in March, 2023. At the time, CIRO was in discussions with both FSRA and the OSC to ensure its participation would not result in regulatory duplication.
Last year, FSRA published an amendment to its own fee rule, which reduced the fees CIRO pays the agency, in order to reflect the fact that the OSC already provides oversight of CIRO’s activities.
The new credentialing approval from FSRA will allow for four categories of people licensed with CIRO to use the financial adviser title: registered representatives (such as securities-licensed investment advisers), mutual fund dealing representatives, portfolio managers and associate portfolio managers.
CIRO license holders who fall outside those categories – such as options-only derivatives traders – are excluded from the approval.
CIRO chief executive Andrew Kriegler said in a statement that FSRA’s approval will “give investors confidence that they are dealing with highly qualified financial advisers.”
But since CIRO first announced its intention last year to join FSRA’s list of approved bodies, a number of industry advocates – including FAIR Canada, CFA Societies Canada and the Financial Planning Association of Canada – have voiced concerns about the industry allowing licensed mutual fund dealers to call themselves financial advisers.
Mutual fund representatives only need to complete an entry-level course to become licensed. Many advocates have said these representatives – including bank branch employees – should not be presented to consumers as sophisticated advisers, or given the same title as people who have attained more advanced credentials, such as a securities licence.
Mr. Loke said he is aware of some investor advocates calling for a higher standard. But he said CIRO’s approval is “appropriate, given the need for retail investors to access advice.”
“Until 2022, there were no requirements for the use of the title financial adviser,” he added. “So someone using that title could be selling high-risk mortgage investments or high-risk illiquid investments. Now, what we have done is finalized a regime, where before investors might not have understood where to get financial advice.”
Mr. Loke said investors with more complex advice needs should consider professionals with more advanced training, such as financial planners.
FSRA is also set to announce Tuesday that it will conduct a review of the new title regime by the end of March, 2024. Part of the review, FSRA said, will look at proficiency standards for the financial planner and financial adviser titles, to ensure they remain relevant and aligned with what consumers expect.
The review will also include an evaluation of credentialing bodies’ policies and processes, including complaint handling and disciplinary practices.