BRIDGEFORCE 2014
COMPLIANCE MEETING
FSCO Compliance March 2014
About FSCO
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FSCO is a provincial body with regulatory jurisdiction in
Ontario and is governed by the Financial Services
Commission of Ontario Act, 1997.
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FSCO is an integrated regulator with solvency and market
conduct oversight of the following sectors:
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Insurance (Life & Health and Property & Casualty)
Pension Plans
Credit Unions and Caisses Populaires
Mortgage Brokers and Administrators
Co-operative Corporations
Loan and Trust Companies
March 2014
Financial Services Commission of Ontario
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FSCO Regulatory Core Activities
Filings &
Applications
Monitoring &
Compliance
Enforcement
&
Intervention
Licensing &
Registration
Regulatory
Policy
March 2014
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Market
Conduct
Regulation
and
Supervision
Financial Services Commission of Ontario
Regulatory
Collaboration
CCIR /
CISRO
MFDA
FMGF /
OMIA
OSC
RIBO
DICO
IIROC
Ministry of
Finance
OSFI /
FCAC
Other
Regulators
FINTRAC
Police
Services
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Financial Services Commission of Ontario
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Outcomes of Risk-based Market
Conduct Regulation
FSCO’s expectations for the conduct of individual licensees:
 Fair treatment of consumers and claimants
 Disclosure of information to enable consumers to make
informed decisions
 Compliance with laws
 Good corporate governance
 FSCO’s expectation for system level conditions supported by
individual licensees:
 Stable marketplace
 Proactive identification of issues
 Fair Dispute Resolution
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Financial Services Commission of Ontario
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Compliance Regulatory and
Supervisory Landscape
2004
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2006
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Removed unnecessary barriers to
licensing
Introduced written disclosure of
actual or potential conflicts of
interest (O. Reg 347/04)
Insurance industry practices review:
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Questionnaire
Industry sponsored codes of ethics
rather than impose rules
Principles based
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March 2014
Priority of the Client’s interest
Disclose actual or potential conflicts
Recommend suitable products
Financial Services Commission of Ontario
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Compliance Regulatory and
Supervisory Landscape
2012
2013
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Agreement on Internal Trade, the
Ontario Labour Mobility Act, the
Ontario-Quebec Trade and Cooperation Agreement and industry
requests for harmonization.
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Life Insurance Product Suitability
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March 2014
Questionnaire
Agent non-compliance activity
Follow-up on improvements
Canadian Insurance Regulators
Disciplinary Actions database
Financial Services Commission of Ontario
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Compliance Regulatory and
Supervisory Landscape
2013
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Consultation on a Proposal to
Modernize Disciplinary Hearings for
Insurance Agents and Adjusters
2014
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Develop a harmonized proficiency
standard to replace the LLQP and
the standard currently in place in
Quebec
New FSCO computer system under
development to handle all types of
licences on line
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March 2014
Financial Services Commission of Ontario
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Consumer Complaint Handling System
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Consumers have come to rely on a high level of complaint
handling and dispute resolution service from the “Industry
First Response” framework.
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Ontario’s consumer complaint handling system is working
well.
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All stakeholders must continue to refine and strengthen
industry standards for Consumer Complaint Handling
Protocols.
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Work with companies to ensure that complainants who have
unresolved complaints are aware of the opportunity to have
those complaints reviewed independently.
March 2014
Financial Services Commission of Ontario
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Complaints – Life & Health Insurance
Life and A&S Products
Life Investment Products
9%
12%
30%
10%
19%
30%
69%
Administration
,
13%
14%
30% Life - Whole
14% Life - Other
10% Life - Term
9% Disability
Claims /
Settlements, 36%
13% Life - Universal
69% IVICS – Seg Funds
30% Marketing
& Sales
13%
30%
11%
26%
Administration
47%
13% Claims &
Settlement
26%
47% Marketing &
Sales
4%
26% Licensing
12%
13%
12% Annuities/RSPs
Top 5 Life Investment Causes
Top 5 Life and A&S Causes
4%
19% Other
13%
Administration
4% Other
26%
12% Licensing
11% Product
4% Other
IMPORTANT: This presentation and the data included herein is intended for limited purposes and should NOT be used by any other parties or in
advertising or any publications without FSCO’s prior written consent. The information above should only be considered in the context of this illustration.
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Financial Services Commission of Ontario
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How Do We Decide What Action to
Take?
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March 2014
Within the
Superintendent’s authority
to do so
Public harm – number of
victims or amount of
money involved
Type of offence
Deterrence value – specific
and general
Seriousness of misconduct
Frequency
Sensitivity
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Financial Services Commission of Ontario
Repeat occurrences or
the risk of reoccurrence
Timeliness
Chances of success
Appropriate remedy is
available
Matter is subject to
criminal prosecution or
other litigation
Issue is systemic in nature
Sometimes, because it is
the right thing to do
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Scope of Possible Compliance
Actions
http://www.fsco.gov.on.ca/en/insurance/enforcement/Pages/agents.aspx
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Financial Services Commission of Ontario
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March 2014
Financial Services Commission of Ontario
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Recommendations from the 2013 IMF Assessment of
Canada Against the Insurance Core Principles
18. Intermediaries
March 2014
a) Maintain the positive
momentum in promoting
appropriate harmonisation of the
regulatory regimes and
supervisory practices with
respect to intermediaries across
provinces;
b) Consider establishing
proportionate expectation
tailored for intermediaries,
focusing on achieving fair
treatment outcome for
policyholders;
Financial Services Commission of Ontario
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Recommendations from the 2013 IMF Assessment of
Canada Against the Insurance Core Principles
19. Conduct of Business
(COB)
March 2014
Strengthen the current COB regimes
by:
a) Continuing the proactive
initiatives by CCIR and JFFMR to
enhance consistency of COB
regulatory regimes across provinces;
b) Empowering FSCO to issue
enforceable rules on product
development and promotion as well
as require insurers and
intermediaries to conduct needs
analysis before providing advice and
meet policy servicing obligations;
Financial Services Commission of Ontario
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Recommendations from the 2013 IMF Assessment of
Canada Against the Insurance Core Principles
21. Countering Fraud in
Insurance
March 2014
While their enforcement work
has included action against
intermediaries in relation to
misrepresentation of
insurance cover to a customer,
consider the merits of setting
out both AMF and FSCO
expectations of intermediaries
in the area of fraud controls
more clearly.
Financial Services Commission of Ontario
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Recommendations from the 2013 IMF Assessment of
Canada Against the Insurance Core Principles
22. Anti-Money
Laundering and
Combating the Financing
of Terrorism
March 2014
In relation to intermediaries,
consider how best AMF and
FSCO should set out their
AML/CFT expectations in more
detail, drawing on their
supervisory work and
experience.
Financial Services Commission of Ontario
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Emerging Issues - Complexity
1. Products are targeted and marketed to customer groups for
which they are not suitable.
2. The customer does not understand the product being
targeted at them.
3. The intermediary does not understand the product.
4. The company does not fully understand how the product will
perform or is unable to monitor the risks to customers.
5. The company cannot fully support a product after it is
launched (systems / volumes).
6. All financial services sector market participants will be
affected by global regulatory reforms and market trends.
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Financial Services Commission of Ontario
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Questions?
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Financial Services Commission of Ontario
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