Canada’s life insurance industry is opposing a proposal by the Ontario government that would prevent people licensed to sell insurance from using the title “financial adviser” or “financial planner.”
In a pre-budget submission to Ontario Finance Minister Rod Phillips, the Canadian Life and Health Insurance Association (CLHIA) is asking the province to re-examine the list of approved industry designations that would be included in new regulations on the use of professional titles in the financial services industry.
The proposed rule – which is currently being drafted – requires anyone in Ontario who wants to use the title “financial adviser” or “financial planner” to obtain certain credentials and remain in good standing.
Currently there is a wide array of titles and credentials used by individuals in Ontario’s financial services marketplace, such as brokers, insurance agents, bank employees and staff at mutual fund dealers.
Last year, Ontario passed the Financial Professionals Title Protection Act to improve oversight of qualifications and credentials used in the financial services sector. At the same time, the government appointed the Financial Services Regulatory Authority of Ontario (FSRA), Ontario’s new financial services regulator, to oversee the development of detailed rules and decide which industry designations would qualify.
FSRA’s complete list of approved designations is still under review, but in a report released in August, the regulator said some existing licences or designations may not meet the new minimum requirements.
For example, the FSRA does not anticipate that the existing Harmonized Life Licence Qualification Program (HLLQP) – which is required to sell life insurance – would meet the new standards for technical knowledge, professional skill and competency. About 50,000 people in Ontario hold the HLLQP designation.
Now, in advance of Ontario’s fall 2020 budget, the insurance industry group is concerned the new act will add “an unnecessary regulatory burden” on those who hold life licences if they have to obtain additional training and education.
“The new life licences are already subject to regulatory educational requirements and oversight,” CLHIA wrote in a submission released earlier this week.
CLHIA argues that the content covered by the life licence already meets the standards the proposed rule would require, and includes topics such as financial services knowledge, ethics, client outcomes and technical knowledge.
“As such, completing the HLLPQ and maintaining a life licence indicates a level of knowledge that meets or exceeds the baseline competency of someone who calls themselves a ‘financial adviser,’” said CLHIA.
The rule proposal is currently open for a 90-day industry comment period. FSRA has asked for input on a series of questions, including whether advisers should be required to disclose the credentials they hold to investors, whether there are any individuals who should qualify for an exemption, and options for consumer education.
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