Insurance regulations: Time for an overhaul?

Inconsistency seems to be the only consistency with regulations governing advisors in Canada. One industry expert says it’s time for a change.

Insurance regulations: Time for an overhaul?
Inconsistency seems to be the only consistency with regulations governing advisors in Canada.

“What we see is there is not consistency in the way standards are applied, and you have to recognize this is across the country,” said Greg Pollock, president and CEO of Advocis. “For example, in Ontario there is a continuing education requirement for insurance licensees. That same requirement does not exist in the four Atlantic provinces.”

Regulations are in the spotlight after the Ontario Auditor General’s report that took issue with FSCO.

Pollock sees a lot of commonality across the country with insurance authorities, but the challenge is there are distinct regulators in each province and there is more than one regulator within that province.

For insurance in Ontario, for example, there’s FSCO. But on the investment side of the industry the MFDA regulates mutual funds, IIROC is in charge of securities license – you’re regulated by IIROC and it's delegated that responsibility through the OSC.

“In a sense you have four regulators regulating the sale of products to consumers and that makes it somewhat complicated for people, although the industry itself seems to be handling it reasonably well,” Pollock said.

Advocis would like to see a uniform approach adopted across Canada.

“So what we’re saying is we need similar standards for similar licenses throughout the country,” said Pollock. “There will be different needs in different parts of the country in order to get that standard to the same level.”

This fragmentation of different regulators in provinces has led to some advisors that take advantage of the system falling through the cracks.

“There are inconsistencies in the way penalties are applied and people can often move very easily from one sector into another sector if they’ve been banned; or from one geographic part of the province to another geographic part of the province if they’ve been banned or their license stripped away,” said Pollock.

He was quick to point out that only a very small minority were taking advantage of the system.

“That’s not to say we shouldn’t fix it,” he said. “Of course we want to fix it. One is too many. One should not be able to just sector-hop as we call it – having been found wanting in one sector and then going on working in another sector.”

 

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