Vast majority of IDA advisors meet CE deadline

Two cycles and six years later, the IDA’s system for tracking continuing education (CE) credits is running smoothly and the proof is in the numbers. According to the regulator, more than 98% of registrants completed their credits by the December 31 deadline.

Of the 16,000-plus advisors who were required to complete their CE credits during the IDA’s three-year cycle, fewer than 200 advisors have yet to comply. That’s an improvement over the first cycle, but no one knows exactly by how much.

Larry Boyce, the IDA’s vice-president of compliance and registrations, says it’s difficult to make the comparison between the two cycles because the precise number isn’t known due to kinks in the IDA’s reporting system at the time. After the first cycle Boyce estimates about 5% of advisors were thought to be short on their credits.

“The difficulty was that as we worked through sending out fine notifications…we got a lot of reports back that there were errors.” Many of these problems continued into the second cycle.

Boyce concedes he only became confident with the IDA’s own reporting system this past fall when all of the bugs were worked out, allowing firms the ability to directly report their credits to the IDA’s database. “Now they can look up to see who is incomplete and follow that up,” he says.

Richard Thomas, the vice-president in charge of compliance at Pacific International Securities in Vancouver, agrees the new system is much better than the IDA’s old manual version. “Generally, there have been some significant improvements in the reporting system over the course of the cycle,” he says. All 60 investment advisors at the firm have completed their credits.

According to Boyce, the IDA took in about $405,000 in late completion fees and 18 were suspended for non-completion of their requirements in 2003. The firms employing the roughly 200 reps who haven’t completed their CE requirements in the latest cycle face fines up to $500 per person, per month, for up to six months or until the requirements are met. After six months, the advisor is suspended.

“People, having been burnt once in terms of the penalties, were obviously taking greater care this time,” Boyce says.

The IDA will soon start to audit firms to see what kind of courses they are accepting. The regulator has loosened its stance somewhat on what courses it is willing to accept, at least when it comes to product specific seminars. “Our program initially said that product specific material shouldn’t be considered for CE,” explains Boyce. “Essentially we didn’t want road shows to be counted as CE.” But as a matter of practice the IDA is now giving half credits to courses that provide general discussion on certainly types of products, particularly less straightforward ones like oil and gas income trusts.

Ultimately it is up to the firm to decide which course it accepts, but accredited programs offers an absolute certainly that it will not be challenged.

Still, if after the audit the IDA disagrees with what a firm accepts, chalk it up to a learning experience. “When it is a disagreement in approach or we think they didn’t get it right, it is an educational remedial effort for the firm,” says Boyce. In these situations there is no comeback on the individual or any subsequent late completion fine.

In extreme cases the IDA could take a more stern approach of referring the matter over to enforcement.

Note to advisors, there are only 35 months left before the end of the third CE cycle. Happy studying.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(01/18/06)