FSCO Compliance March 2014 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 ID: 801836
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BRIDGEFORCE 2014 COMPLIANCE MEETING
FSCO Compliance March 2014
Slide2About 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 PlansCredit Unions and Caisses PopulairesMortgage Brokers and AdministratorsCo-operative CorporationsLoan and Trust Companies
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March 2014
Slide3FSCO Regulatory Core Activities
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March 2014
Slide4March 2014
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Slide5Outcomes 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
March 2014
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Slide6Removed unnecessary barriers to licensing
Introduced written disclosure of actual or potential conflicts of interest (O. Reg 347/04)
Insurance industry practices review:
QuestionnaireIndustry sponsored codes of ethics rather than impose rulesPrinciples basedPriority of the Client’s interestDisclose actual or potential conflictsRecommend suitable products20042006Compliance Regulatory and Supervisory LandscapeMarch 2014
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Slide7Agreement
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
QuestionnaireAgent non-compliance activityFollow-up on improvementsCanadian Insurance Regulators Disciplinary Actions database20122013
Compliance Regulatory and Supervisory LandscapeMarch 20147
Slide8Consultation 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 line20132014Compliance Regulatory and Supervisory Landscape
March 20148
Slide9Consumer 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.
March 2014
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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
,
Slide11How 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 offenceDeterrence value – specific and generalSeriousness of misconductFrequencySensitivityRepeat occurrences or the risk of reoccurrenceTimelinessChances of successAppropriate remedy is availableMatter is subject to criminal prosecution or other litigationIssue is systemic in natureSometimes, because it is the right thing to do
March 2014
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Slide12Scope of Possible Compliance Actions
March 2014
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http://www.fsco.gov.on.ca/en/insurance/enforcement/Pages/agents.aspx
Slide13March 2014
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Slide14Recommendations from the 2013 IMF Assessment
of
Canada Against the Insurance
Core Principles18. 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; March 201414
Slide15Recommendations 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; March 201415
Slide16Recommendations 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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Slide17Recommendations 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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Slide18Emerging 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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Slide19Questions?
March 2014
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