FSRA CEO Mark White and Clare O’Hara, The Globe and Mail’s wealth management reporter, at the 2024 FSRA Exchange in Toronto.AJ Batac / FSRA/Supplied
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The Financial Services Regulatory Authority of Ontario (FSRA) is standing behind its decision to give the Canadian Investment Regulatory Organization (CIRO) credentialing body status for the financial advisor title and is also placing an onus on advisors licensed to sell mutual funds to disclose their limited capabilities.
Those were some of the key themes Mark White, chief executive officer of FSRA, discussed at the 2024 FSRA Exchange earlier this month in Toronto in an interview with Clare O’Hara, The Globe and Mail’s wealth management reporter.
The conversation centred around regulation in Ontario’s credit union sector, property and casualty and life and health insurance sectors, as well as the regulator’s authority in overseeing the provincial government’s Financial Professional Titles Protection Rule.
Under this authority, the regulator approves credentialing bodies and the credentials financial services market participants use to determine who can use the title of financial advisor or financial planner.
Here is an excerpt of the discussion that focused on this topic:
FSRA’s approval of CIRO as a credentialing body for the financial advisor title earlier this year has caused much concern for investor advocates, particularly around mutual fund-licensed advisors. Why is FSRA allowing thousands of individuals who are registered by CIRO, but who many consider to be salespeople, to use the financial advisor title?
We’re doing it because it’s demonstrably in the consumer interest, and it’s completely aligned with the regime that exists in law. But CIRO is the gold standard for many of the things we want to see in credentialing bodies. It’s overseen by the Ontario Securities Commission and the Canadian Securities Administrators. It has a very highly developed conduct and discipline framework. So, the people who are in CIRO’s framework are well overseen and well regulated.
The issue some consumer advocates have is they’re concerned some CIRO basic licensees are looking at mutual funds as the sole product. But by being in our regime, they have a professional code of conduct and ethics and a minimum standard of competency. They must not only understand the products they sell, but they have a responsibility to understand alternate products.
It’s a good sign CIRO is willing to come into our regime knowing that’s the case. There’s an opportunity for everybody to bring up the bottom end of that competency.
Is there concern because CIRO oversees two different types of advisors that someone who’s engaging with a mutual fund-licensed advisor may think they’re talking to a securities-licensed advisor, who offers very different advice?
That concern exists today. By being in our regime now, which was broadly supported, yes, the mutual fund level should be qualified for the financial advisor title. But whenever these advisors are using the title, they also have to say what their credentials are.
It will be apparent through the credential check tool we provide that a consumer can easily find out a mutual fund-licensed advisor is different than someone who gives full advice on stocks, bonds and other investments. That transparency is very important.
What’s the status of Advocis as a credentialing body considering its financial situation and the legal troubles that have been reported?
Advocis is a credentialing body [for the financial advisor title] and we have an obligation to watch what’s going on. It has been very forthcoming. The new management has been engaging with us whenever we’ve asked. Advocis is a credentialing body in good standing and its fees are fully paid. So, the people who are using titles through Advocis should have confidence that will continue.
Like all credentialing bodies, Advocis also has its weaknesses, so we continue to be focused on supervising those. And, of course, any organization that’s going through change at the top, we’re making sure it’s not cutting back on necessary resources, that it’s still providing governance, and that its eye isn’t off the ball. We’ll deal with that if we must through the normal supervisory tools.
– Pablo Fuchs, Globe Advisor editor
This interview has been edited and condensed.
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