The Regulatory Environment
Regulations applicable to the Financial Planning profession depend on the scope of activities of the financial planner. The scope of these activities should be described in a Letter of Engagement and Disclosure offered to you by a financial planner. Financial planners may provide independent advice on a fee-for-service basis, or advice linked to the sale of financial services or products to implement that advice, or both.
Some jurisdictions, such as the Province of Quebec, restrict who can describe themselves as a Financial Planner (Planification Financiere). In some provinces, federal and provincial regulation does not apply to financial planners who are not involved in the sale of specific financial product, security or service, nor to the advice they provide.
In those cases, consumers should determine if their financial planner’s competency to provide advice has been accredited by a professional association such as the Institute of Advanced Financial Planners (IAFP™), which administers the R.F.P.® (Registered Financial Planner™) designation.
Financial planners who are involved in the sale of financial products or services generally practice in one of the most regulated sectors in the country. Regulation is designed to ensure full disclosure and that consumers are dealt with fairly. The securities commission, administrator or superintendent of insurance in each province license those who wish to sell securities, mutual funds and insurance policies in the course of their financial planning engagement, while the Mutual Fund Dealers Association (MFDA) and Investment Dealers Association (IDA), as “self-regulatory organizations” (SROs) ensure compliance with securities regulations.
Firms registered with the Mutual Fund Dealers Association (MFDA) and their representatives cannot hold themselves out to the public through use of any business name, designation of qualifications or professional experience that deceives or misleads the public, a client or any other person as to the proficiency or qualifications of an Approved Person under the MFDA Rules or any applicable legislation.
In Canada, the regulation of financial institutions and investment dealers is a shared responsibility among different organizations and levels of government which sometimes overlap. Generally however, * Banks are federally regulated * Securities dealers, credit unions and caisses populaires are provincially regulated * Insurance, trust and loan companies, and co-operative credit associations may be federally and/or provincially regulated, depending on the jurisdiction under which the company is incorporated or registered.
The federal Department of Finance relies on three federal agencies to supervise the ongoing operations of those institutions under federal responsibility, and their compliance with legislation: * The Office of the Superintendent of Financial Institutions (OSFI) monitors the financial integrity of financial institutions. * Canada Deposit Insurance Corporation (CDIC), provides deposit insurance to protect deposits that Canadians have in their federally-insured financial institutions.
* The Financial Consumer Agency of Canada (FCAC) ensures compliance with federal consumer protection measures including disclosure requirements and complaints.
For institutions under provincial jurisdiction, the province(s) in which a company is incorporated or registered is (are) responsible for regulating the company’s overall activities. The provinces delegate certain responsibilities to agencies and organizations that supervise the ongoing operations of these institutions.
Each province has its own securities commission or administrator responsible for the preservation of market integrity through the application of disclosure and conduct rules. This body delegates certain aspects of securities regulation to the Investment Dealers Association of Canada(IDA), the Mutual Fund Dealers Association of Canada(MFDA) and the stock exchanges, which are “self-regulatory organizations” (SROs). Efforts are underway among some of these bodies to streamline the regulations within provinces through the Uniform Securities Legislation project of the Canadian Securities Administrators (CSA).
The federal Personal Information Protection and Electronic Documents Act (PIPEDA) protects Canadians’ rights to privacy with respect to personal information that is collected, used or disclosed by an organization in the private sector. The Act is based on 10 Privacy Principles which outline the ways in which organizations collect, use and disclose personal information. It also addresses the rights of individuals to provide consent, access and correction to their personal information. A financial planner who provides financial products and services may collect from a client or others, personal information for the following purposes: * to identify the client; * to comply with legal, security, processing and regulatory requirements such as those imposed by the Income Tax Act (ITA); * to protect against error and fraud; * to ensure that investments are suitable for the client; * to provide ongoing service and advice; * to offer products and services that meet the needs of a client. Members of the IAFP are bound by Canon 2 of the R.F.P. Code of Ethics to hold in strict confidence all confidential information acquired in the course of the professional relationship with their clients (including prospective clients). However, a financial planner does not have legal privilege with respect to communications with clients and may be required by law to disclose certain information.
Last updated: 30 Nov 2016 10:10 AM
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