In 2019, the Ontario government introduced the Financial Professionals Title Protection Act (FPTPA) which established minimum standards for the use of Financial Planner (FP) and Financial Advisor (FA) titles in the province. The legislation came into force in March of 2022, with transition periods set to expire in March 2024 for FA title users and March 2026 for those using the FP title.
The Financial Services Regulatory Authority of Ontario (FSRA) has enforcement authority under the FPTPA, which extends to approved credentialing bodies, individuals who use the FP/FA title without a credential (and who are not covered by the transition periods), and any person or organization holding themselves out as an approved credentialing body or purporting to grant an FP/FA credential without FSRA’s approval. As part of ensuring compliance with the FPTPA and associated guidance/terms and conditions, FSRA recently released its ‘2023-2024 Financial Planners and Financial Advisors Supervision Plan’ which outlines the ways in which FSRA will examine how approved credentialing bodies are meeting their obligations.
FSRA applies a risk-based approach to its supervision of credentialing bodies. How a credentialing body’s risk is assessed will depend on a number of factors including the number of complaints FSRA receives against the body, instances of non-compliance with the FPTPA, rule or associated guidance/terms and conditions, any inaccurate Annual Information Returns, the financial position of the body, and the number of credential holders in their program. As part of its supervision plan for 2023-2024, FSRA identified four “key areas” which will draw heightened focus over the next two years:
Putting Client’s Interests First: One of the central principles which FSRA requires credentialing bodies to integrate into their credentialing program is the requirement to put the interests of the client first. To satisfy this requirement, FSRA requires all credentialing bodies to ensure credential holders adhere to a code of conduct/professional standards which expressly incorporates the principle of putting a client’s interests above that of the credential holder.
Resource Stress Testing: FSRA expects each credentialing body to commit adequate resources to ensure they are able to effectively administer and maintain their credentialing program. As part of meeting this standard, credentialing bodies are expected to have appropriate policies to manage conflicts of interest, an adequate number of qualified, competent subject matter experts to deliver curriculum content and conduct oversight and supervision of credential holders, a resource requirement projection to determine current and future staffing needs, and sufficient resources to handle the operations of the credentialing body and to investigate and resolve complaints or conduct disciplinary proceedings where necessary.
Complaint Handling: The FPTP Rule requires credentialing bodies to maintain an effective complaint handling process which is both transparent and impartial. As part of this requirement, FSRA has clarified its expectations for credentialing bodies to meet this standard by having:
- a fair, easily accessible, and efficient complaint handling process;
- robust processes to oversee credential holder conduct, adjudicate complaints, and impose discipline;
- reasonable service standards including standardized processes to investigate complaints including publishing of the facts and associated disciplinary action;
- unbiased and impartial processes to enforce the code of conduct/professional standards; and
- a robust and effective complaints management program.
Disciplinary Process: The FPTP Rule requires credentialing bodies to maintain transparent and impartial processes to enforce discipline where there is evidence of misconduct by credential holders. In order to meet this standard, credentialing bodies must have standardized criteria and processes in place to implement appropriate disciplinary action relative to the type of misconduct, to reach consistent and reasonable disciplinary outcomes sufficient to deter further misconduct, and to have a reasonable publication policy for disciplinary actions.
Individuals who wish to use either the FP or FA title in Ontario and who are not covered by a relevant transition period will need to obtain a credential from one of the four credentialing bodies already approved by FSRA. Failure to do so may result in an examination and the issuance of a compliance order, the details of which will be published on FSRA’s website. In addition, firms would be well-advised to ensure that their advisors have the appropriate credential from an approved body and to maintain documentation evidencing that fact.
August 31, 2023