Ontario financial services watchdog found insurance agency trained its agents to oversell universal life policy benefits
Greatway Financial, a life insurance agency with thousands of agents across Canada, has been subject to enforcement over charges of misleading sales practices.
But because of a gap in regulation between the country’s provinces, many of its consumers could still be falling through the cracks.
The Financial Services Regulatory Authority (FSRA) of Ontario, the province's regulatory body, last month ordered Greatway to re-educate its agents in Ontario and to advise current policyholders in Ontario who had dealt with Greatway agents to review their coverage.
The provincial watchdog issued the order after it found Greatway’s sales agents were pushing a universal life insurance strategy called an Insured Retirement Plan, or IRP for short, that demanded extra cash be set away as a tax-deferred fund for when the cost of insurance rises as the insured matures.
While the IRP is appropriate for higher net-worth individuals, such as those who have maxed out their RRSP, FSRA found its agents were selling the product to all consumers, touting them as a savings account rather than an expense for insurance.
“Agents trained by Greatway may provide consumers with information and advice which is inappropriate, inaccurate or misleading regarding the terms, benefits or advantages of certain insurance policies, including universal life policies sold under an insured retirement plan strategy.” the Ontario authority had claimed.
“[Greatway’s] Training instructs Agents: ‘Rule of Thumb: Do Not Mention Insurance Amount’; ‘don’t focus on life insurance’; ‘remove the insurance mindset and have the client focused on saving/investment’; and ‘Do not mention Face Amount yet. Use this as a ‘jackpot’ moment,’” FSRA said in its notice of proposal (NOP) against the agency.
The corporation must take extra steps "to ensure that customers who purchase Universal Life policies in Ontario are provided with information and advice that is appropriate and accurate," according to the Ontario authority's Dec. 16, 2022 ruling.
In 2018, Greatway had 1,400 licensed agents throughout Canada and sold over 13,000 insurance, according to the Ontario authorities, who highlighted that the company has "expanded fast" in recent years. As reported by Glacier Media, the offices of Greatway Financial Inc. include branches in five BC locations: Abbotsford, Kelowna, Surrey, Burnaby, and Victoria.
Approximately 25,000 policies were sold by Greatway's 3,490 agents in Canada in 2021, according to FSRA. The number of Greatway agents working in British Columbia, and precisely how many cases of insurance policies being oversold have occurred in the province under the FSRA's specified conditions, remains unknown.
The BC Financial Services Authority (BFSA), the FSRA's provincial counterpart, operates as the “single integrated regulator of B.C.’s financial services sector overseeing credit unions, trust and insurance companies, mortgage brokers, pension plans, and real estate services.”
But the BCFSA informed Glacier Media that it doesn’t regulate agencies like Greatway, and that responsibility belongs to the Insurance Council of BC (ICBC).
Through agreements with life insurance providers, Greatway serves as a liaison between the insurers and its agents. The council oversees such organizations.
The ICBC told Glacier Media that since October, it has been undertaking a "compliance review pertaining to the subject matter stated in the Order issued by the Financial Services Regulatory Authority of Ontario," but provided few other specifics.
“This type of review looks at whether licensees’ conduct and insurance practices are compliant with the requirements of the Insurance Council’s Rules, Code of Conduct, and the Financial Institutions Act,” stated spokesperson Melinda Lau.
While the Canadian Council of Insurance Regulators (CCIR) conducted a joint review of Greatway and three other agencies in the first half of 2022, Lau noted that it’s the BCFSA, and not the ICBC, that’s part of CCIR.
FSRA, which led the CCIR joint review, posted its findings – formed the basis of Greatway’s notice the following month – on its website on Sept. 28, 2022.
The BCFSA was described as a “passive participating authority.”
