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The regulatory framework in Canada tends to be more complex than in the UK, given that individual provinces have some degree of autonomy about factors such as consumer protection legislation. A mixture of federal and provincial standards can be difficult to comprehend, posing a challenge for expatriates needing the assurance that their financial matters are in good hands.

Here our Ontario team runs through some of the most important differences to be aware of, and why they matter.

Understanding Canadian Financial Legislation

One of the first things to note is that, while an adviser needs to be appropriately regulated to sell or advise on regulated products like stocks, insurance plans or mutual funds, that requirement does not always extend to offering general financial advice.

As recently as March 2022, the Financial Services Regulatory Authority of Ontario announced new rules. Over a four-year transition period, ending in 2026, professionals must adhere to the following requirements:

  • Service providers referring to themselves as financial planners or advisers must be registered with an authorised professional body.
  • Financial planning businesses must be overseen by an independent body and are subject to disciplinary and complaints processes.
  • Anybody using a financial advisory professional title will need to meet minimum education criteria and comply with code of conduct standards.

The importance of this update is that, until March 2022, no such provisions had been enforced in the province. The proposal had been pending since the 2019 budget and will not take full effect until the end of the four-year phased compliance period.

Many foreign nationals living overseas assume similar rules exist to those in the UK and make significant decisions based on advice that may not be subject to regulation. Hence, the need to comprehend where the standards are different and what that means for your wealth management options.

Buying a Property in Canada

The next area to look at is mortgage borrowing or any financial product related to buying a residential home or investing in property – acknowledging the moratorium preventing foreign nationals from buying a Canadian residential home until 2027.

Again, rules vary between provinces – although most strictly regulate mortgage brokers, there are exceptions. A new set of nationwide requirements that applies to all mortgage lenders, brokers and administrators enforced by the Financial Transactions and Reports Analysis Centre of Canada has been developed and will apply from October 2024 onward.

If you’re looking for reliable advice from an experienced wealth management adviser, it’s advisable to check their accreditations carefully and ask about the regulations they are compliant with.

The mortgage system itself is often unfamiliar:

  • Standard UK mortgages run for 25 to 30 years, but in Canada, they are usually only five-year contracts, amortised over a 25-year average.
  • Property owners must renew or refinance their products every five years, potentially encountering an increased interest rate.
  • Prepayment penalties are steep, often making it financially unviable to repay a property loan early to avoid higher interest costs.

One of the advantages for Canadian residents is that most fixed-rate mortgages in the country are portable, so if you move home during the five-year term, you can apply your existing mortgage to the new property, with an additional loan for the excess if the value is higher.

Mortgage interest is not tax-deductible unless the property is an investment asset so your advice from a tax-efficiency perspective may be somewhat different than in the UK.

Speak to an Adviser in Canada

Canadian Investment Regulations

Many expatriates need to make decisions about pension wealth, investment assets and savings, with numerous factors influencing the best course of action. Our guide to the Tax Implications of Transferring a UK Pension to Canada is a valuable resource if you’d like to learn more about transfer taxation and balancing the risks and rewards of varying pension structures.

Until last year, the regulatory framework around investing was devolved, with two distinct self-regulatory organisations tasked with monitoring standards and business conduct to protect consumers and investors.

In January 2023, those two organisations merged – the Investment Industry Regulatory Organisation of Canada (IIROC) and Mutual Fund Dealers Association (MFDA) were consolidated to form the Canadian Investment Regulatory Organisation (CIRO). Previously, the two former regulators dealt respectively with investment brokers and equity markets and conduct and practice standards for mutual fund deals.

The key takeaway for expatriate investors is that until very recently, regulations linked to different types of investments or products were overseen by separate bodies. The CIRO is a newly formed organisation representing the first time that a national regulator has been responsible for monitoring all mutual fund and investor dealers and professionals working in the debt and equity marketplaces.

Foreign nationals relocating to Quebec may also need to know that the Montreal Exchange is categorised as a self-regulatory organisation, the only financial derivatives exchange available.

The Benefits of Understanding Overseas Financial Advice Standards

Regulation is imperative to ensure consumers aren’t given inappropriate advice or purchase financial products such as insurance policies without safeguards against mis-selling or unethical practices.

Some of the most common financial mistakes expatriates make include:

  • Neglecting insurance or having an insurance product that doesn’t cover them against key risks – uninsured health treatments abroad can run into substantial costs.
  • A lack of knowledge around inheritance laws that may dictate how your assets are distributed unless you have put an effective strategy in place beforehand.
  • Filing incorrect tax declarations or not accounting correctly for double taxation.

These errors can be extremely costly, but are easily avoided with competent financial advice, adherent to the most robust regulations around professionalism, consumer protection and transparency.

Why is it worth knowing which regulations apply and which organisation is responsible? The fast-evolving regulatory environment in Canada can be difficult to navigate, with multiple reforms introduced in recent years. Being conscious of the consumer protections in place, and the appropriate regulators, makes it easier to select a financial adviser with the proper authorisations and registrations.

Choosing the Right Financial Advisers in Canada

Chase Buchanan Wealth Management has a strong presence in key locations globally, with our Ontario team working alongside advisers in the United States and across Europe. As a specialist financial advisory and wealth management service, we work with foreign nationals and expatriates worldwide, providing clear advice, long-term strategic recommendations and holistic support to help you achieve your financial aspirations.

If you’d like further information about how the financial systems and regulations work in Canada, please visit our Expat Pension Planning Advice for Retirement in Canada as a first step to understanding some of the crucial considerations during an international relocation. You are also welcome to contact our Ontario office at your convenience or get in touch with the Chase Buchanan UK Administration Centre to arrange a good time to talk.

*  Updated April 2024