FPSC Comments on the proposed
new CSA Rule regulating financial planners
Media Release
FPSC FEARS CSA PROPOSED
REGULATION OF FINANCIAL PLANNERS MAY NOT ADEQUATELY PROTECT
PUBLIC
March 6, 2000 (Toronto, ON)
- In its response to the proposed Rule governing product registrants
and life agents holding themselves out as financial planners
filed today, Financial Planners Standards Council (FPSC) says
the Canadian Securities Administrators (CSA) Multilateral
Instrument 33-107 may not achieve its stated goal of protecting
the public from seeking comprehensive financial planning advice
from persons who are unqualified to provide it.
"While well intentioned,
this Rule will only add to the confusion that already puts
the investing public at risk of obtaining unqualified financial
planning advice from registrants," says FPSC President
Don Johnston. "This Rule has been published prematurely.
There are too many ambiguities, conflicting statements and
too many missing pieces for it to be effective regulation."
FPSC's submission states:
"Good regulation has a clearly defined statement of purpose
and a defensible process fully developed and in place before
implementation is considered." It expresses the following
major concerns about the Rule:
It does not clearly identify the level at
which the 'cornerstone of the proficiency standards",
the FPPE, will examine competency.
It has chosen to put in place only one check
for individuals who are relied upon for competent, ethical
financial planning advice.
It does not indicate that an objective process
is in place to develop an examination that will test individuals
at a stated level of competence sufficient to protect the
public.
FPSC believes that some
form of mandatory regulation of standards in financial planning
is a desirable goal, and it recognizes the difficulty the
CSA has set for itself in developing a workable model for
consumer protection regulation within the existing securities
regulatory framework. "So we've had to reluctantly work
with CSA's notion of using a "filtering" examination
as its cornerstone. But licensing is a serious business,"
says Johnston. "The public will expect a level of professionalism
of the licensed planner that this Rule does not define. It
certainly does not establish standards as high as those set
by FPSC for the Certified Financial Planner® (CFP®)
designation which include rigorous standards in education,
examination, experience and ethics. So what level does it
come up to?" FPSC believes this is the question the Rule
must clearly and unequivocally answer so as not to mislead
the unsuspecting consumer.
FPSC first recommends
that "the Rule clearly state prior to its implementation
the level of financial planning competence at which the new
FPPE will test."
"Because the Rule
doesn't make clear the level of proficiency this new examination
will test, we had to make some assumptions based on statements
in the background material. The main one is, that the new
exam will test at a level of proficiency that is equivalent
to that set by the CFP Professional Proficiency Examination.
But if this is the case, many of the grandfathering provisions
and the way the exam is being developed do not make sense.
One also might question the reason for such a duplicative
effort."
Among the major recommendations
made by FPSC are those that all individuals who wish to hold
themselves out as financial planners prior to the development
of a CSA examination should be required to write the CFP examination.
"If CFP is the level they're aiming for," says Johnston,
"then lets make everyone coming up the pipe write an
exam that is in place and does the job - the CFP exam."
As part of FPSC's continuing program evaluation
and to augment the integrity of the exam process, the CFP
certification process was recently audited by an independent
testing and measurement company, Assessment Strategies Inc.
(ASI). "ASI confirmed that our process
meets generally accepted measurement standards, " says
Johnston.
In its comments to CSA, FPSC suggests that whatever
level of financial planning proficiency the CSA wants to set,
it too should include a similar assessment process. "Until
the CSA exam is judged to be adequate, ours is ready and available,"
says Johnston.
FPSC makes 15 recommendations for modifications
to the Rule that it believes will help to ensure a minimum
level of protection for the public is put in place - a goal
FPSC supports.
FPSC's efforts in establishing and regulating
professional standards for financial planners who wish to
earn the internationally recognized CFP® designation
in Canada is supported by seven organizations whose members
deal with the personal finances of individuals. They are:
The Canadian Association of Financial Planners (CAFP); Canadian
Association of Insurance and Financial Advisors (CAIFA); The
Canadian Institute of Chartered Accountants (CICA); The Canadian
Institute of Financial Planning (CIFP); Certified General
Accountants Association of Canada (CGA Canada); Credit Union
Institute of Canada (CUIC); The Society of Management Accountants
of Canada (CMA Canada).
There are currently more than 11,000 CFP
professionals in Canada and more than 55,000 in 12 countries world-wide.
Don Johnston, President, Financial Planners Standards Council
is available for interviews.
For more information or to arrange an interview,
please contact:
Ann Bowman, Director of Communications FPSC
Tel:(416) 593-8587 ext. 225
Fax: (416) 593-6903
E-mail: abowman@cfp-ca.org
CFP®, CERTIFIED FINANCIAL PLANNER® and are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planners Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB.
are certification marks