Sousa to beef up rules for financial planners
New regulations designed to improve consumer protection
Finance Minister Charles Sousa is beefing up the laws governing Ontario’s investment industry in order to improve consumer protection.
Sousa said the government will clamp down on investment advisers who evade paying cash fines after they break the rules and hurt their clients.
“Today, I am announcing that our government will be proposing legislative changes that would improve enforcement at investment industry self-regulatory organizations (SRO) . . . by allowing them to file their decisions with the court,” the treasurer said Friday.
“This measure will improve the SROs’ ability to collect fines levied against individuals and help to deter potential offenders from wrongdoing in the first place,” he said in a speech to the Toronto Financial Services Alliance at the Westin Harbour Castle.
“Better collection would increase funds available for the SROs to pursue their regulatory activities and strengthen investor protection. Together, these initiatives will provide greater protections for consumers and, ultimately, greater confidence in your industry.”
The minister noted the provincial government is already moving forward with new regulations overseeing the financial planning and advisory services industry.
In a report delivered to the government earlier this month, an expert panel led by Malcolm Heins, former CEO of the Law Society of Upper Canada, concluded financial advisers and planners require some oversight.
“The current regulatory framework for financial planning and advisory services in Ontario needs reform. This opinion was shared by consumers, the industry and the regulators,” said Sousa.
“In fact, the panel found that the status quo is harming consumers.”
He said there is a need for “specific, harmonized regulation of financial planning and financial advice.”
Sousa also decried “the lack of consistency and rules regarding titles and credentials used by providers of financial planning and advisory services and the lack of an explicit obligation to act in the client’s best interest.”
“That is why I have taken steps to modernize regulations and definitions to provide greater consumer protection,” he said.
“Consumers relying on Ontario’s financial services industry deserve the benefit of a strong consumer protection framework to protect their interests providing confidence and greater integrity.”
Last year, Sousa announced a new body — the Financial Services Regulatory Authority of Ontario — would provide “a more consumerfocused, stronger and more modern regulator of financial services and pensions.”
That regulator strengthens oversight of provincial pension plans, mortgage brokers, credit unions and Ontario-registered insurers.
The Investment Industry Regulatory Organization of Canada’s CEO Andrew Kriegler said the reforms send an “important message” to scofflaws.
“If you harm investors in this province you will be held accountable for your actions and pay the penalty,” Kriegler said.
“As a public interest regulator, this new enforcement tool will enable us to provide stronger protection to the investing public and collect fines from wrongdoers who have previously evaded paying the penalty for their misconduct,” he said.
Wanda Morris, vice-president and CEO of CARP, which was formerly known as Canadian Association of Retired Persons and advocates for those 50 years and up, also praised Sousa’s announcement.
“I have had heartbreaking conversations with members who have lost their life savings. There is more to be done, but today’s announcement is a critical first step,” said Morris, noting the changes will make it easier for self-regulatory agencies to collect fines from rule-breakers.
“Investors will be further protected when funds are collected and invested in increased monitoring and expanded investor education.”