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May 2018
FAIR Focus
May : A Watershed Moment

FAIR Canada Releases its Accountability Report 2014-2017: A Watershed Moment
FAIR Canada is proud to have released its latest Accountability Report of its activities during its fiscal years 2014 to 2017. The Accountability Report reflects the work FAIR Canada has put into achieving its mission. FAIR Canada is pleased to report on its work on behalf of Canadian financial consumers over the past three fiscal years and believes that individual Canadians benefit from having a professional voice that can represent their interests during the policy-making process.
To read FAIR Canada's statement on the release of the Accountability Report, please click here

To read FAIR Canada's full Accountability Report: 2014-2017, please click here.

The Team at FAIR Canada
FAIR Canada Comments on Proposed MFDA Staff Notice on MFDA Member Intermediary Arrangements
FAIR Canada provided brief comments to the MFDA on the proposed Staff Notice on MFDA Intermediary Arrangements intending to clarify requirements under MFDA Rules 1.1.3 (Service Arrangements) and 1.1.6 (Introducing and Carrying Arrangements). FAIR Canada agrees that the MFDA should justifiably be concerned with the practices it describes in the proposed Staff Notice involving non-registered intermediaries (NRIs). 

FAIR Canada is of the view that confusion as to who is responsible for the financial consumers' investments should be avoided and responsibility and regulatory oversight of the client's investments (both securities and non-securities) should be seamless and avoid regulatory gaps. While we understand the MFDA's position that such intermediary arrangements should be entered into as Introducing/Carrying Dealer arrangements pursuant to requirements under Rule 1.1.6, we wonder if that can be a complete solution since, from the description provided in the proposed Staff Notice, such arrangements only permit clients to hold investments in which the Member is able to trade or advise. We also question whether this will lead to greater outside business activities by Members.

To read the comment letter in its entirety, click  here.
FAIR Canada Comments on Regulation of Financial Planners
FAIR Canada has provided comments on the Ministry of Finance's consultation paper on the regulation of financial planners. FAIR Canada makes a number of points in its submission, which includes:
  • If you wish to reduce consumer confusion, misleading titles, and poor financial planning and/or investment advice, you must address more than credentials and holding out in respect of financial planning. You must institute a statutory best interest standard so that consumers can rightly and safely expect that their financial advisors and financial planners provide them with objective, professional advice.
  • To proceed with meaningful title restrictions, it is essential that the title reflect the ability of the individual financial services representative (and his or her firm) to provide objective, professional financial advice rather than conflicted sales. The use of the title "financial planner" (and "financial advisor") should be restricted to those who have attained the necessary level of proficiency (including the appropriate proficiency) and can only provide unbiased advice that is not in conflict with the client's best interest.
  • The use of business titles be restricted to the following categories:         
    •  "Financial Planner" for those who have the necessary proficiency (including credential) and who provide services on a fee-for-service basis (such as hourly or a set fee for a financial plan) and who do not receive any compensation for product sales or referrals;
    •  "Investment Advisor" or "Financial Advisor" or "Financial Planner" (if the latter has the appropriate financial planning credential) for those that are subject to a fiduciary duty and a statutory best interest standard (once implemented) ;
    • "Portfolio Manager" for those licensed to exercise discretionary authority (including robo-advisors) while operating within business models that allow them to comply with the fiduciary duty already required of such registrants; and
    •  "Salesperson" for the remaining financial services representatives who do not meet the above restricted categories.
    • All other business titles should be prohibited.
  • FAIR Canada calls for greater proficiency requirements in Canada. The current proficiency framework was designed, many decades ago, around the sales process, for salespeople. The existing standards are structured around the particular products representatives are permitted to sell, not the overall quality of advice provided to retail investors. The existing proficiency requirements should be raised for financial planners and for those who provide financial product sales or financial advice, regardless of whether the conduct standard is raised to one of best interests, or those set out in the Proposed Targeted Reforms of the CSA, or even if the status quo is maintained.
  • A single, free, comprehensive central registry must be created and maintained with adequate resources to provide a one-stop source of information for consumers regarding licensing and registration status, credentials and disciplinary history of individuals and firms.
To read FAIR Canada's full submission, please click here.
Media FAIR in the Media

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