Self-regulating professions in need of review of guidelines and rules

The Competition Bureau of Canada says self-regulating professions should re-examine their rules in an effort to ensure they are serving the public good by reducing their restrictions on competition

By John Cooper

Issued last December, the report of the bureau looked at five professions: accountants, lawyers, optometrists, pharmacists and real estate agents. The bureau suggests that the rules in need of review include those limiting advertising, the setting of prices for services, and restrictions on exactly who can offer professional services. According to competition commissioner Sheridan Scott, the Canadian economy could gain a boost with fewer regulations in place.

“We understand that regulation plays a legitimate role in protecting consumers and meeting public policy goals,” Scott says. “However, not all the regulations we look at appear necessary, and removing some of these restrictions could benefit consumers and the Canadian economy.”

The bureau cited recent studies showing that Canadian professions are over-regulated compared to their counterparts in other jurisdictions.

“We found restrictions in each of the professions, and some varied by province or territory,” says Eric Ferron, the bureau’s senior competition law officer. “We found that some of the rules may be going further than necessary. For instance, in the case of advertising, you need to start with the premise that advertising is good for the public. We need to look at some areas that may be unnecessary and look to eliminate them, (especially) price or competitive advantages.”

The service sector accounts for up to 70 per cent of the Canadian economy; according to a Conference Board of Canada study, the professional services are in the bottom 20 per cent for labour productivity, with Canada’s professional labour activity half that of the U.S. The bureau cited an OECD (Organization for Economic Co-operation and Development) study that states that relaxing regulations in the professions could improve Canada’s future prosperity.

Under review

The study was based on an analysis of legislation, regulations, codes of practice and responses to a questionnaire sent to professional associations, colleges and boards. Before going public, it conducted a fact-checking review with professionals.

According to the bureau, the biggest areas in need of review are:

• Advertising regulations, particularly with respect to comparative advertising. The rules often exceed the requirements with respect to protecting consumers from false or misleading advertising;
• Re-examining fee structures that inhibit price competition and lead to higher prices, based on the approach that consumers benefit when professionals compete on price;
• Organizations’ self-imposed limits on the provision of professional services, leading to higher prices for consumers. For example, the bureau cites restrictions on independent audits by accountants (an area now limited according to jurisdictions), with the goal of possibly waiving such restrictions;
• The need for accreditation bodies to review the demand for professional services and potentially change educational requirements (or the opening of educational facilities or programs) accordingly;
• Uneven licencing requirements across the country, which restrict the number of professionals in the field and reduce their ability to move across jurisdictions and into higher-demand areas, with the goal of better serving consumers by allowing qualified professionals to work anywhere in Canada.

Ferron cites accounting as an area that might benefit from a review of its rules. For example, with respect to public accounting, “we are saying that everybody who does public accounting should be entitled to do full public accounting,” says Ferron. “This should not be restricted to certain organizations. If an accountant is considered competent to do accounting with respect to bylaws ... they should be able to do it.”

Ferron says that accountants have applauded the study. “They were happy to see that we were asking for fewer regulations. They looked at the report in terms of how it applies to them and how they can modify their rules and regulations. The initial response was very good.”

CMA Canada in favour of recommendations

According to Bob Parry, CMA Canada’s director of public accounting, “CMA Canada supports the bureau’s recommendation that all members of accounting designations that have the appropriate level of competence should have the right to practice the full extent of public accounting. This includes performing audits and other assurance work resulting in the issuance of opinions to users of financial information that it is not materially misstated and fairly presented.”

“In order to ensure that all CMAs who practice public accounting do so within an appropriate framework, CMA Canada has established a National Standard for Public Accounting,” adds Parry.  “Furthermore, recognizing that CMAs, despite having competence in strategic management accounting, may not possess the specific competencies required by public accounting practice, it is understood that these competencies must be obtained by way of a post-designation program of study and  practical experience, demonstrated by passing the CMA Public Accounting Examination.  The knowledge, skills and attributes required are set out in the Incremental Syllabus for CMAs to Practice Public Accounting.”            

The Federation of Law Societies of Canada (FLSC) said it is welcoming the bureau’s comments and will continue to review the report.

“The Federation of Law Societies of Canada and its members share the Competition Bureau’s interest in ensuring that law society rules represent best practices for professional regulation,” Michael W. Milani president, FLSC, says. “The mandate of Canada’s law societies is to regulate the legal profession in the public interest and they always strive to make improvements. They also listen whenever interested parties make constructive comments for improvement. We are reviewing and considering the report and its recommendations.”

For its part, the Canadian Pharmacists Association (CPhA) expressed surprise that it was even included in the Competition Bureau study.

“While CPhA had no major critiques of the report, we were somewhat surprised that the Competition Bureau chose to look at pharmacists since the restrictions on owning and opening a pharmacy that were the rationale for this type of review of competition in Europe [in a previous study] do not apply in Canada,” says Jeff Poston, executive director, CPhA. “Efforts to promote competition between health care professionals in Canada need to be considered very carefully.”

If there was any one area that appeared to be too over regulated in all five professions, it was advertising, adds the bureau’s Ferron.

“Generally for all professions it was the advertising restrictions that were rigid,” says Ferron. “That was one aspect that seemed to be stricter than necessary (and) the first one that needs to be looked at. It’s certainly one of the ones that could be loosened.”

Ferron says the Competition Bureau, an independent law enforcement agency aimed at protecting and promoting competitive markets as well as increasing customer choice, is open to further discussion with self-regulating organizations and will undertake a second review in two years to see if (and to what extent) changes in the self-regulatory approach were undertaken by the professions profiled in the report.

John Cooper is a Whitby, Ont.-based freelance writer.  

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