BRIDGEFORCE 2014 COMPLIANCE MEETING FSCO Compliance March 2014
Feb 25, 2016
BRIDGEFORCE 2014 COMPLIANCE MEETING
FSCO Compliance March 2014
Financial Services Commission of Ontario
About FSCO
FSCO is a provincial body with regulatory jurisdiction in Ontario and is governed by the Financial Services Commission of Ontario Act, 1997.
FSCO is an integrated regulator with solvency and market conduct oversight of the following sectors:
Insurance (Life & Health and Property & Casualty) Pension Plans Credit Unions and Caisses Populaires Mortgage Brokers and Administrators Co-operative Corporations Loan and Trust Companies
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Financial Services Commission of Ontario
FSCO Regulatory Core Activities
Market Conduct
Regulation and
Supervision
Regulatory Policy
Licensing & Registration
Filings & Applications
Monitoring &
Compliance
Enforcement &
Intervention
Regulatory Collaboratio
n
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Financial Services Commission of Ontario 4
DICO
RIBO
FMGF / OMIA OSC
MFDA
IIROC
Ministry of Finance
OSFI / FCAC
CCIR / CISRO
Other Regulators
Police Services
FINTRAC
March 2014
Financial Services Commission of Ontario
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
Removed unnecessary barriers to licensing
Introduced written disclosure of actual or potential conflicts of interest (O. Reg 347/04)
Insurance industry practices review: Questionnaire Industry sponsored codes of ethics
rather than impose rules Principles based
Priority of the Client’s interest Disclose actual or potential conflicts Recommend suitable products
2004
2006
Compliance Regulatory and Supervisory Landscape
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Financial Services Commission of Ontario
Agreement on Internal Trade, the Ontario Labour Mobility Act, the Ontario-Quebec Trade and Co-operation Agreement and industry requests for harmonization.
Life Insurance Product Suitability Questionnaire Agent non-compliance activity Follow-up on improvements
Canadian Insurance Regulators Disciplinary Actions database
2012
2013
Compliance Regulatory and Supervisory Landscape
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Financial Services Commission of Ontario
Consultation on a Proposal to Modernize Disciplinary Hearings for Insurance Agents and Adjusters
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
2013
2014
Compliance Regulatory and Supervisory Landscape
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Financial Services Commission of Ontario
Consumer Complaint Handling System
Consumers have come to rely on a high level of complaint handling and dispute resolution service from the “Industry First Response” framework.
Ontario’s consumer complaint handling system is working well.
All stakeholders must continue to refine and strengthen industry standards for Consumer Complaint Handling Protocols.
Work with companies to ensure that complainants who have unresolved complaints are aware of the opportunity to have those complaints reviewed independently.
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Financial Services Commission of Ontario 10
Complaints – Life & Health Insurance
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.
March 2014
Claims / Settlements, 36%
30% Administration,
30%
14%13%
10%9%
Life and A&S Products
30% Life - Whole 14% Life - Other 13% Life - Universal10% Life - Term 9% Disability
69%
19%
12%
Life Investment Products
69% IVICS – Seg Funds 19% Other 12% Annuities/RSPs
30%
26%
13%
13%4%
Top 5 Life and A&S Causes
30% Marketing & Sales
26% Licensing
13% Claims & Settlement
13% Adminis-tration
4% Other
47%
26%
12%
11%4%
Top 5 Life Investment Causes
47% Marketing & Sales
26% Administration
12% Licensing
11% Product
4% Other
i.e. regulatory ac-tions by other ju-risdictions
Financial Services Commission of Ontario
How Do We Decide What Action to Take?
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
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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Financial Services Commission of Ontario
Scope of Possible Compliance Actions
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http://www.fsco.gov.on.ca/en/insurance/enforcement/Pages/agents.aspx
Financial Services Commission of OntarioMarch 2014 13
Financial Services Commission of Ontario
Recommendations from the 2013 IMF Assessment of Canada Against the Insurance Core Principles
18. Intermediaries 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;
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Financial Services Commission of Ontario
Recommendations from the 2013 IMF Assessment of Canada Against the Insurance Core Principles
19. Conduct of Business (COB)
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;
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Financial Services Commission of Ontario
Recommendations from the 2013 IMF Assessment of Canada Against the Insurance Core Principles
21. Countering Fraud in Insurance
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.
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Financial Services Commission of Ontario
Recommendations from the 2013 IMF Assessment of Canada Against the Insurance Core Principles
22. Anti-Money Laundering and Combating the Financing of Terrorism
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.
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Financial Services Commission of Ontario
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
Questions?
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