Advocis rejects

(July 7, 2003) Advocis is refusing to support the uniform securities legislation (USL) project after the Canadian Securities Administrators (CSA) rebuffed the advisor association’s latest regulatory reform initiative. The country’s largest association of professional financial advisors wants industry designations to be officially recognized as a holding-out requirement for advice-giving.

The Advocis plan, unveiled at last month’s national conference in St. John’s, Newfoundland, identifies four separate areas of financial advice (insurance, financial planning, investments and portfolio management), and ties each to an industry designation (CLU, CFP, Fellow of the Canadian Securities Institute and Chartered Financial Analyst .

Advocis president Steve Howard recently presented the concept to CSA chair Stephen Sibold, who’s leading the USL effort. “We were told to wait for the second phase of this project, which could be five to eight years away from being implemented,” Howard says.

“What [Sibold] said is ‘we’ve got our heads down on developing the USL and the first phase is harmonization and the second phase is to get to the details,'” Howard told Advisor.ca.

Howard says that while the CSA’s goal of harmonizing the various securities regulations across Canada is laudable, they can’t expect to gain widespread support without talking specifics. “They’re not prepared to talk about the second phase, what the model would look like as a practical matter,” he says.

Sibold has said that in order for the USL to meet its deadlines, the project must remain narrowly focused to avoid what he calls “scope creep.” A draft version of the USL is due this fall and Sibold hopes the legislation will be formally approved by the provinces in spring 2004.

Advocis will bypass the regulators and take its latest project directly to federal and provincial politicians, Howard says. “We have to mount a political action ourselves and tell them why we think the model is flawed and what we think the alternative is,” he adds.

Leaving aside the latest Advocis initiative, Howard has larger concerns about the USL. “It’s built on a fundamentally flawed model because it doesn’t recognize the role of advice, it simply recognizes transactions.”

“The role of associations and designations should be recognized,” he says. “The problem is the model, not the lack of uniform legislation.”

What do you think of Advocis’s leadership on this issue? Do you agree with the viewpoint that the USL project is “fundamentally flawed”? Share your thoughts, solutions and opinions with your fellow advisors in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca