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Answers to your questions about Bill 157

Q: Will Bill 157 add another layer of regulation for financial advisors?
A: Governments are not interested in overlap and duplication of regulation. It's our objective to ensure the new body oversees the profession of financial advisors like all other professions are governed in the province.

Currently financial advisors are being strangled by regulation; they are subject to more than 50 federal and provincial statutes and regulatory bodies. This confusing, complex and inefficient system exists because regulations have been developed in a patchwork fashion.

Regulation has focused on the sale and distribution of product, with each sector — mutual funds, life insurance and securities — having its own set of regulations. Ultimately these costs are borne by consumers. The terrible result of over-regulation is that professional financial advice is being priced out of the reach of those who need it most: "Main Street" Canadians.

Bill 157 for the first time in Ontario, will directly regulate all advisors regardless of the products they are selling, and will also regulate fee-for-service/fee-only advisors. This harmonized approach will streamline and simplify the regulatory process.

It is our desire to ensure that regulation affecting the advisor-client relationship would reside within the self-governing body. Advocis prefers to be in a position to shape regulation that affects the client-advisor relationship; if we don't, regulators will continue to develop more and more regulations lacking the unique perspective that financial advisors bring to the policy development table. Current regulators such as IIROC and the MFDA will have to work with the new body to reduce duplication as the new body will have significant oversight of financial advisors.

Who better to oversee financial advisors than those who know the ins and outs of the business, who understand what standards should apply, and who have a direct stake in preserving the trust and confidence of consumers?

Advocis has always been a strong proponent of the right kind of regulation for our members.

Q: Would Advocis become the new self-regulatory body (SRO)?
A: While Bill 157 does not make Advocis the new SRO, the professional body will have advisor representation within its governance structure. Many of today’s regulators do not have advisor representation.

We want Advocis education and professional standards to be recognized by the new entity so a member of our association in good standing would receive preferential standing with the new body. This would elevate the status of Advocis with the new entity. Advisors would no longer be an afterthought in the regulatory policy development process. The financial advisor profession would determine what is appropriate behaviour in the client-advisor relationship and what constitutes a conflict of interest, for example.

Advocis would also seek standing for its designations. Advocis is not opposed to other standards or designations being recognized as the legislation calls for the recognition of such standards through the creation of specializations. These details would be outlined in the regulations and subsequent administrative agreements once the legislation is passed.

Q: What kind of fees will I have to pay to be an advisor under this new structure? Will my fees go up?
A. We will be working very hard to keep this cost-neutral for Advocis members.

All professional oversight bodies (e.g., Professional Engineers of Ontario) run their organizations through fees paid by its members. There are over 40,000 financial advisors in Ontario, so the total cost would be spread across a significant number of participants. Since Advocis would seek special standing with the new entity for its education, professional standards and designations, we are anticipating that a portion of the current membership fee in Advocis would be remitted to the new entity to deal with standard setting and disciplinary action; the remaining fee would stay with the association as it continues to develop advisor education programs, best practices, networking opportunities, and advisor business services, and works to ensure we have a strong voice with the oversight body and any other government and regulatory agency.

Q: Can you explain the exemptions in Bill 157?
A: Anyone holding out as a financial advisor would have to register with the new body regardless of what regulated profession they are in. However, Bill 157 does not apply to those working in certain professions that are already governed under separate acts, where they are not holding out as financial advisors (i.e., not in a dual occupation), and where in the course of their work they may offer what could be interpreted as financial advice, in the broad definition set out in the Act, that is ancillary to their main line of business. These individuals include lawyers, accountants and other professionals. This was always the intent under the Advocis Professions Model.

Let’s look at the example of a tax lawyer who doesn’t hold out as a financial advisor but provides advice on trusts and estate planning. If, in the future, this individual wants to hold out as a financial advisor, then he would have to register under the Financial Advisors Act, 2014. However, because the advice he is providing is ancillary to his job as a tax lawyer, he would not have to be registered under the Act as he is already covered under the professional legislation that governs lawyers. The same situation would apply to an accountant who offers tax advice on trusts and estate planning. If this individual were found to be offside by his or her professional body, he or she would face the disciplinary process outlined by the accounting professional body. Accordingly, to have the accountant as a registrant under the Financial Advisors Act, 2014, would be layering regulation on top of regulation. This is why such exemptions exist. Those falling under an exemption are professionals who are already governed by a professional association.

What they're saying

I fully support this initiative by Advocis. It's about time financial advice was treated as a profession.  
D. Keith Pike
London, Ontario
I wholeheartedly support the aims and objectives of Advocis's proposal.  
Louis Eb Bang
Ottawa, Ontario
I support a higher standard for financial advisors and creating greater public confidence in our
industry.   
Kristopher A. Cameron
Calgary, Alberta
This is long overdue. Kudos to Advocis for taking the initiative on this matter.
Richard Bradford
Red Deer, Alberta
I support all the work Advocis is doing to help us. Keep up the good work and let's continue to give professional advice to our clients in an unbiased
way.   
Reg Hart
Miramichi, New Brunswick

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