2023-2024 Financial planners and financial advisors supervision plan

The Financial Services Regulatory Authority of Ontario (FSRA) is an independent regulatory agency established to improve consumer protection in Ontario. FSRA promotes high standards of business conduct by regulating financial services sectors, including the Financial Planners and Financial Advisors sector.

For 2023-2024, FSRA’s risk-based supervision approach for approved credentialing bodies will focus on examining four key areas of supervision:

Putting Client’s Interest First	Resources Stress Testing	Complaint Handling Process	Disciplinary Process
How prioritization of the Client’s Interest First principle is integrated at the core of the credentialing bodies’ credentialing program.	How credentialing bodies are prepared to handle increased demands on resources and ensure they can effectively administer and maintain a credentialing program.	Transparency and accessibility of credentialing bodies’ complaint handling processes to the public and ensuring they are fair and efficient.	Process for credentialing bodies to impose appropriate and timely disciplinary actions.

Examinations will focus on the approved credentialing body’s requirements under the Financial Professionals Title Protection Act, 2019 (FPTPA), the Financial Professionals Title Protection (FPTP) Rule and the terms and conditions of FSRA’s approval.

What this means for industry and consumers

Focusing its supervision plan for approved credentialing bodies on these four key areas will:

• help FSRA assess how well approved credentialing bodies are adapting as regulated entities under the Financial Professionals Title Protection Framework
• ensure that all credential holders are aware of the most valued aspect of financial planning and advisory services
• increase overall client satisfaction for individuals who use a Financial Planner (FP) or Financial Advisor (FA) title
• increase consumer protection and add value to the framework
• ensure credentialing bodies have sufficient staffing and adequate resourcing (including financial resources) to ensure the integrity of the credentialing program and the individuals who hold approved credentials
• ensure that credentialing bodies’ complaint handling processes are robust, effective, fair, and efficient, with the underlying goal to serve the public interest and protect consumers
• ensure the consistency and reasonability of disciplinary outcomes/actions to deter credential holder misconduct and ensure integrity and professional conduct in the sector.

FSRA plans to publish the aggregated results of these examinations and the relevant supervision findings to identify trends and opportunities for improvement, best practices and any shortfalls observed, which is consistent with FSRA’s other regulated sectors.

Comprehensive examinations allow FSRA to protect and promote the public interest and take corrective action quickly, where necessary.

The Ontario government introduced the Financial Professionals Title Protection Act in 2019 as a consumer protection measure to increase professionalism and confidence for individuals using the FP or FA title in Ontario. This is the first time minimum standards have been established for FP/FA title users and organizations. The legislation came into force in March 2022.

Prior to the implementation of the Financial Professionals Title Protection Framework, which represents the set of legislation, Rules and Guidance under the Financial Professionals Title Protection Act, anyone in Ontario, regardless of their qualifications, could call themselves a FP or FA. This led to questions about the proficiency and qualifications of these individuals. There was also confusion over the wide array of titles in the marketplace resulting in greater likelihood for consumer confusion and harm.

With the introduction of the Financial Professionals Title Protection Framework, the use of the FP and FA titles is now limited to only those individuals who have obtained an approved credential from a FSRA-approved credentialing body. As of June 2023, FSRA has approved four credentialing bodies and nine credentials. There are approximately 17,000 credential holders permitted to use the FP and FA titles in Ontario. The Financial Professionals Title Protection Framework ensures that an individual using the FP or FA title:

• is subject to a minimum standard of education
• is actively supervised
• is subject to a complaints and disciplinary process

As such, consumers can have increased confidence when working with a credentialed FP and/or FA financial professional to help plan and achieve their financial goals.

FSRA differentiates the FP and FA titles by establishing different levels of technical knowledge, professional skills and competencies that would be reasonably expected of each title user.

Furthermore, while the introduction of the Financial Professionals Title Protection Act allowed for increased consumer protection by establishing minimum requirements for the use of FP and FA titles, it also set out transition provisions that enable financial services professionals to have sufficient time to familiarize themselves with the new requirements.

The title protection framework is being phased in over time to allow FPs and FAs to determine whether FSRA has approved their existing credential and/or take the necessary steps to obtain a new credential.

The transition periods apply to individuals using the FP and FA titles on or before January 1, 2020. Individuals using the FP and FA titles have four years and two years, respectively, from March 28, 2022, to continue to use the titles.

Individuals who started using the FP or FA title after January 1, 2020, are only permitted to do so once they hold an approved credential from a FSRA-approved CB.

As part of its regulatory activities, FSRA oversees approved credentialing bodies and monitors their compliance under the Financial Professionals Title Protection Framework. Through supervision and examination, FSRA will ensure the effective implementation of the minimum standards under the Financial Professionals Title Protection Framework with a goal of enhanced consumer protection, higher industry standards and consistency among credentialing bodies.

Through supervision, FSRA may also assess a credentialing body’s readiness for potential future enhancements under the Financial Professionals Title Protection Framework and identify where credentialing bodies are not meeting minimum standards.

FSRA aims to achieve the following outcomes through the supervision of credentialing bodies:

• Integration of the client’s interest first principle at the core of a credentialing body’s credentialing program(s) and a requirement for credential holders to adhere to a code of conduct and/or professional standards, which include a requirement to put the client’s interests first.
• Adequate resourcing to effectively administer and maintain a credentialing program(s).
• Fair, easily accessible, and efficient complaint-handling processes with the underlying goal of serving the public interest and protecting consumers.
• Transparent, consistent, and reasonable disciplinary processes and sanctions capable of deterring credential holder misconduct and ensuring integrity and professionalism in the sector.

The Financial Professionals Title Protection – Supervisory Framework Guidance (Supervision Guidance) outlines the supervisory tools that FSRA will use to monitor a credentialing body’s compliance, such as:

• Examinations of credentialing body business practices
• Annual Information Returns (AIRs)

FSRA takes a risk-based approach to supervision. It will conduct examinations and supervise/monitor approved credentialing bodies to ensure they remain in compliance with the requirements of the Financial Professionals Title Protection Act, the Financial Professionals Title Protection Rule, associated guidance and terms and conditions of approval.

Each year, approved credentialing bodies will be rated against risk factors, such as:

• complaints received by FSRA against the credentialing body
• instances of non-compliance with the Financial Professionals Title Protection Act, Financial Professionals Title Protection Rule, associated guidance or terms and conditions and conditions
• inaccurate AIR filing
• poor/declining financial position of the approved credentialing body
• the number of credential holders in their FSRA-approved FP and/or FA credentialing program

Credentialing bodies with a higher risk rating may be selected for an examination at any time. All approved credentialing bodies will be examined within the first two years the framework is operational. The examination may culminate in several recommendations that could be implemented by the credentialing body to improve performance and ensure compliance with the Financial Professionals Title Protection Framework. The ability to identify key trends and risks and proactively address these challenges is a crucial part of FSRA’s effective oversight of credentialing bodies.

FSRA has the authority to take action

The Financial Professionals Title Protection Framework protects the public interest through the oversight of approved credentialing bodies. FSRA has authority under the Financial Professionals Title Protection Act to take enforcement action against:

• Approved credentialing bodies.
• Individuals who use the FP or FA titles without an approved credential, subject to transition provisions.
• Persons or organizations holding themselves out as an approved credentialing body or offering an approved FP/FA credential without having the required FSRA approval.

FSRA has the authority to take the following enforcement actions under the Financial Professionals Title Protection Act:

• Issue compliance orders against individuals who use the FP/FA title without an approved credential, or persons or entities who misrepresent themselves as an approved credentialing body or offer an approved credential without FSRA approval.
• Issue compliance orders against a credentialing body, and in the most egregious of circumstances, revoke a credentialing body’s approval, for non-compliance with the Financial Professionals Title Protection Act, the Financial Professionals Title Protection Rule or terms and conditions of approval.

Supervising individuals without an approved credential

The Financial Professionals Title Protection Act grants FSRA enforcement authority over individuals who use the FP/FA titles without an approved credential. FSRA will accept consumer and industry complaints about individuals who use the FP/FA titles without an approved credential. FSRA will review and investigate complaints in a timely manner and take appropriate action, if warranted. Such action could include FSRA issuing a compliance order.

The transition periods for FP and FA title use are still in effect (until March 2024 for FA title use and March 2026 for FP title use). As a result, proactive enforcement during this time would not be effective. FSRA takes compliance with the title protection framework seriously and will implement proactive enforcement strategies once the transition period for FA and FP title use has lapsed.

Credential holders conduct oversight under the framework

Credentialing bodies are responsible for overseeing the professional conduct and activities of credential holders​.

FSRA has the regulatory authority to oversee approved credentialing bodies, including ensuring that credentialing bodies have the necessary policies, procedures, and administrative practices to effectively oversee the conduct of individuals holding approved credentials. As such, part of FSRA’s supervision efforts is to ensure credentialing bodies have an effective complaint-handling process in place to respond to complaints and concerns from the public regarding their respective credential holders.

Consumers seeking to file complaints against credential holders overseen by a FSRA approved credentialing body can do so by visiting the respective credentialing body’s websites, seen below:

• FP Canada
• Institute for Advanced Financial Education (IAFE)
• Canadian Securities Institute (CSI)
• The Canadian Institute of Financial Planning (CIFP)

FSRA aims to focus its 2023-2024 supervision plans on four key areas (listed below).

FSRA collaborated with various consumer/industry stakeholders, FSRA-approved credentialing bodies and the FP/FA Stakeholder Advisory Committee’s feedback and findings from this work identified the four key areas as high priority.

Findings and actions resulting from the examinations could result in enhanced requirements for credentialing body approval as outlined in the approach guidance – Financial Professionals Title Protection – Administration of Applications (Application Guidance).

Area of Focus	Potential Risks	FSRA Requirements
Image Putting Client’s Interest First	Assurance that recommendations made, and products/solutions offered are truly in the best interest of the client.	FSRA requires credentialing bodies to integrate the client’s interest first principle at the core of the credentialing body’s credentialing program(s).
Image Resources Stress Testing	Inefficient processes and procedures for managing resourcing. Failure for credentialing body to protect its credentialing certification process from undue or improper influence and sustaining the integrity of its credentialing program so that only qualified individuals are granted a credential.	FSRA requires credentialing bodies to have adequate resources to effectively administer and maintain a credentialing program and are prepared to handle increased demands.
Image Complaints Handling	An inaccessible complaint management system or inappropriate service standards related to complaints handling do not protect the interest of consumers.	FSRA requires credentialing bodies to have a fair, accessible, transparent, and efficient complaint-handling process with the underlying goal of serving the public interest and protecting consumers.
Image Disciplinary Process	Inconsistent disciplinary actions. Procedural unfairness: whether the disciplinary process is reflective of the credentialing body’s Code of Conduct/Disciplinary Procedures and/or follow the formal disciplinary procedures. Failure to provide proper training for staff/Disciplinary Committee members resulting in members not applying the disciplinary procedure consistently and fairly. Failure to conduct investigations thoroughly could render a disciplinary procedure unfair as the investigation is the foundation of the disciplinary procedure and a fair procedure is vitally important.	FSRA requires credentialing bodies to have a transparent, consistent, and reasonable disciplinary process for imposing appropriate, timely disciplinary actions ensuring integrity and professional conduct in the sector.

Supervision focus area #1: Putting the client’s interest first principle

Understanding the client’s needs and goals and prioritizing them is the most valued aspect of financial planning and advisory services. The Financial Professionals Title Protection Rule requires that an individual using an approved credential “deal with the individual’s clients competently, professionally, fairly, honestly and in good faith.” FSRA believes that part of meeting that standard of care is to prioritize (i.e., “put first”) the interests of a client whenever preparing a financial plan or providing financial advice.

FSRA requires approved credentialing bodies to ensure all credential holders adhere to a code of conduct and/or professional standards, which include a requirement to put the client’s interests first.

FSRA aims to assess the credentialing bodies’ implementation of the “putting client’s interests first” principle into their policies and procedures in the administration of their approved credentialing program(s). This may include how credentialing bodies are proactively communicating to their credential holders the importance of prioritizing clients’ interests through their approved education program(s), and how this principle is enforced in their complaint handling and disciplinary processes.

These requirements and assessments achieve the following outcomes:

• to ensure that all credential holders are aware of the most valued aspect of financial planning and advisory services
• to increase overall client satisfaction for individuals using the services of a FP or FA
• to increase consumer protection and add value to the framework

Supervision focus area #2: Resources stress testing

The Financial Professionals Title Protection Rule requires credentialing bodies to have an effective governance structure and administrative policies and procedures that serve the public interest and have the necessary expertise, resources, policies, procedures, and administrative practices to effectively administer and maintain a credentialing program.

FSRA believes that part of meeting this standard includes having:

• appropriate processes in place to manage real and perceived conflicts of interests with respect to the credentialing body’s structure, operations, credential holder oversight and/or credentialing decisions, which serve the public interest
• an adequate number of individuals delivering curriculum content and examinations and conducting oversight and supervision of credential holders. These individuals must be qualified, competent subject matter experts with the skills and experience to discharge such responsibilities, or under the management of those who have such qualifications, skills, and experience.
• a resource requirement projection to determine staffing needs as a result of a credentialing body’s participation under the Financial Professionals Title Protection Framework, and having a contingency plan in place to handle the increase in work volume (e.g., hiring additional staff and establishing staffing and expenditure reserves the credentialing body can access if they have a shortage of staff)
• sufficient resources, including staff who are equipped with the necessary expertise to handle the operations of the credentialing body, investigate, and resolve complaints, and conduct disciplinary proceedings.

Supervision focus area #3: Complaints handling process

The Financial Professionals Title Protection Rule requires credentialing bodies to maintain effective processes to respond to complaints and adjudicate complaints in a transparent and impartial manner.

FSRA believes that part of meeting this standard includes having:

• a fair, easily accessible, and efficient complaint handling process that integrates ‘putting the client’s interest first’ principle into its complaints management process
• robust processes to oversee credential holder conduct, adjudicate complaints and impose discipline on credential holders who breach the credentialing body’s code of conduct/professional standards, especially those instances where the discipline relates to a breach of putting the client’s interest first principle
• reasonable service standards, standardized processes to thoroughly investigate these types of complaints, take appropriate disciplinary action(s), and impose appropriate actions based on the level of misconduct. This includes publishing the details and facts of the situation and associated disciplinary action
• unbiased and impartial processes, which enforce the code of conduct/professional standards over the interests of their credential holders
• a robust and effective complaints management program to ensure that the credentialing bodies’ complaint handling process is fair and efficient; with the underlying goal to serve the public interest and protect consumers.

Supervision focus area #4: Disciplinary actions

The Financial Professionals Title Protection Rule requires credentialing bodies to maintain effective processes to enforce discipline in a transparent and impartial manner.

FSRA believes that part of meeting this standard includes having:

• transparent processes that document levels of conduct and the approach utilized to deal with disciplinary actions
• standardized processes and criteria for imposing appropriate disciplinary actions based on the type of credential holder misconduct
• processes for environmental scanning that are consistent and applied appropriately
• consistency of disciplinary outcomes imposed and the consistency and reasonability of disciplinary actions to deter credential holder misconduct
• that they have a reasonable publication policy.

As part of its supervision program for the sector, FSRA launched the first Annual Information Return (AIR) for approved credentialing bodies in January 2023. FSRA requires approved credentialing bodies to complete the AIR questionnaire on an annual basis.

The AIR is designed to collect information about business practices, internal controls, and market conditions for the previous calendar year. The information collected from the AIR allows FSRA to help administer and enforce the Financial Professionals Title Protection Act, assess whether the approved credentialing bodies continue to meet the minimum standards outlined in the Financial Professionals Title Protection Rule and the terms and conditions of FSRA’s approval, and assist FSRA in its risk assessment and oversight of this sector.

The information will also provide FSRA with insight into title usage, sector trends, emerging issues, and other relevant areas, as well as assist FSRA in further providing consumer/industry education to help consumers understand the framework and help the industry understand its compliance obligations.

The AIR reporting period is January 1 to December 31 of each year. All FSRA-approved credentialing bodies must complete and submit the AIR by March 31 of each year.

FSRA will utilize this tool as a supervision mechanism to monitor the compliance of approved credentialing bodies with requirements established under the Financial Professionals Title Protection Act.

FSRA expects approved credentialing bodies and stakeholders to review the 2023-2024 Financial Planners and Financial Advisors supervision plan and other relevant FSRA publications and resources for the sector.

FSRA maintains key resources related to the FP/FA sector publicly available on its website. These resources contain information related to the established regulatory standards that guide FSRA’s supervision efforts for the FPFA sector.

Financial Professionals Title Protection – Administration of Applications Guidance

The Administration of Applications Guidance sets out application criteria that approved credentialing bodies have demonstrated in their application in order to be approved by FSRA. The Administration of Applications Guidance is also a valuable tool for organizations interested in becoming an approved credentialing body and offering a FP and/or FA credential in Ontario.

The application form for approval of a credentialing body and FP/FA credentials is available on FSRA’s website. Interested organizations should contact FSRA for more information on how to apply.

Financial Professionals Title Protection – Supervisory Framework Guidance

The Supervisory Framework Guidance sets out FSRA’s supervision approach under the Financial Professionals Title Protection Act and the provisions of the Financial Professionals Title Protection Rule. The Guidance also explains how FSRA interprets titles that could reasonably be confused with FP and FA.

FSRA also has dedicated web pages with additional information related to the FP/FA sector regulatory framework:

• Financial Planners and Financial Advisors Industry page
• Financial Planners and Financial Advisors Consumer page