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, according to the organization's president.
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, Greg Pollock said.
He added 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.
Private member 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.
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