Expert Committee Report on Financial Advisory and Financial Planning Regulatory Policy Alternatives in Ontario now available.

On November 1, 2016 the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives submitted their final report and recommendations to Minister of Finance Charles Sousa. As set out in the Letter from the Chair below, the Committee found that reform is required to unite the fragmented regulation of financial services in Ontario, and better protect customers. This includes the implementation of a statutory best interest duty for investment advisors and financial planners. To review the report in its entirety, please visit the Ministry of Finance website.

November 1, 2016

The Honourable Charles Sousa

Minister of Finance
7 Queen’s Park Crescent, 7th floor
Toronto, Ontario M7A 1Y7

Dear Minister Sousa,

We are pleased to present our final report and recommendations for the regulation of financial planning and financial advice in Ontario.

It was made abundantly clear to us during the course of our research and consultation that reform is required to the current fragmented framework for regulating financial services in Ontario. A harmonized regulatory framework for financial planning and financial advice would not only better protect consumers, but also provide a more streamlined approach to the regulation of financial services in Ontario. The plethora of misleading titles used in the financial services industry combined with the lack of a clearly articulated duty to act in the best interest of the consumer leaves Ontarians vulnerable. We articulate our concerns in Chapter 3 of this report.

We heard from Ontarians via our submission and consultation processes. We heard a clear consensus among consumers, industry and regulators alike that reform is required. Our aging population and the decreased availability of defined benefit retirement arrangements, which previously were the mainstay of Ontarians’ retirement security, are just two of the changes that give rise to the need for changes to better protect consumers. Changes to the regulatory framework for those providing financial planning and financial advice have simply not kept pace with the increasing reliance that Ontario consumers place on their financial planners and financial advisors.

Despite recognition that change is required, there is little consensus among stakeholders as to the appropriate reforms. Our priority has been to make recommendations which ensure that Ontario consumers are well-protected when they engage the services of financial planners and financial advisors. In addition, we have endeavored to rationalize the approach to regulation by the different regulatory bodies in an environment where the financial products offered by the securities, mutual fund and insurance sector are increasingly homogenous and the individuals offering the financial planning and financial advisory services are often cross-licensed. Our recommendations are intended to improve regulatory efficiency in the financial services industry.

As indicated in Chapter 2, this is not the first time that regulatory reform of financial planning and financial advice has been recommended. For example, in 2001, an important attempt at reform was attempted and failed. The government clearly acknowledged the pressing need in the Ontario Economic Outlook and Fiscal Reviews since 2013 and Ontario Budgets of 2014 through 2016. We urge that our recommendations for legal reform be considered and implemented as soon as possible.

To be properly implemented, our recommendations for regulatory reform will require considerable co-operation among regulatory bodies. Given the need for co-operation and harmonization of the proposed regulatory changes across the securities, insurance and mortgage brokering sectors, we have suggested legislative reform that would mandate the implementation of our recommendations. We have also suggested legislative oversight of the implementation of our recommendations and public reporting of progress. Without this approach, which is outlined in Chapter 7, we doubt that reform can be achieved on a timely basis.

During our deliberations and consultations, we encountered some issues for further consideration that were outside of our direct mandate. Of particular note were the issues surrounding financial redress for consumers when they have been poorly served by firms or individuals engaged in financial planning and the giving of financial advice. A streamlined process for consumers to receive redress and/or compensation in the appropriate circumstances is long overdue. We have outlined our thoughts in this regard in Chapter 11.

Combined, our Committee has over 120 years of experience in financial services and the law relating to the financial services industry. We met 42 times over the course of our mandate in addition to time spent communicating with each other, ministry staff and the public, as well as drafting three public documents and doing research. I would like to thank my fellow committee members for their hard work and thoughtful contributions in fulfilling our mandate.

We would like to thank you for the opportunity to be engaged in this pressing project that is so important to Ontario consumers. We also thank those that attended our consultation sessions and made written submissions to us for their thoughtful presentations and assistance in helping us come to our recommendations for reform. Finally, we thank our support staff at the Ministry of Finance for their dedicated assistance – without which this report would not have been possible.

Malcolm Heins

Chair of the Expert Committee to Consider
Financial Advisory and Financial Planning
Policy Alternatives


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