Financial advisers who give advice about securities, mutual funds and insurance should be regulated to protect Canadian consumers from unethical operators, according to a voluntary group that represents financial advisers.
Advocis, The Financial Advisors Association of Canada, is supporting a private member’s bill introduced in the Ontario legislature by Liberal MPP Rick Bartolucci that would regulate both who can practice as an adviser and the quality of the advice.
Currently, anyone can hold themselves out as a financial adviser in the province without any professional designation.
Advocis has been calling for consumer protection in the sector for decades, says its president and CEO Greg Pollock.
“We would like to see financial advisers properly regulated and the Canadian public knowing just who they are dealing with,” he said in an interview with CBC’s Lang & O’Leary Exchange.
Currently insurance and securities are regulated by different entities, with a focus on the products sold, rather than who sells them.
This system is vulnerable to “sector hopping” in which an adviser found guilty of misconduct in the insurance sector could move on to selling mutual funds, Pollock said.
He said he’d prefer to see federal regulation of financial advisers, but since both professional designations and securities are regulated provincially, Advocis is approaching each province to suggest new laws.
While some jurisdictions such as Australia have banned commissions on mutual fund sales, Pollock said he doesn’t see the need to move to fee-only advisers.
“I’d like to see choice in the marketplace. I’d like to see fee-only advisers out there, I’d like to see commission-based advisers, I’d like to see opportunities for all Canadians, whether they’re from Main Street or more well-heeled, having access to the kind of service and advice they need,” he said.
Private members bills seldom pass into law unless they are able to garner the support of the government. Pollock said provincial finance minister Charles Sousa has shown interest in the legislation.