1. Compliance update Living benefits symposium, 2016
Ask – did anyone attend the Fall meeting?
Do you recall what I spoke about? … I’m repeating myself…
Earleen Moulton
VP Compliance, BridgeForce Financial Group

2. Agenda
Audits of advisor practices
FSCO enforcement of E&O insurance

3. Audits for suitability
Advisor suitability or lack of suitability is a risk that we all share in, not just MGAs or Carriers.
Unsuitable advisors hurt us all – they tarnish the reputation of the industry and that impacts you.
The industry has been focusing on ways to better deal with suitability and ensure advisors are suitable in the industry.

4. Monitoring /oversight
Significant controls, manages risk
Screening – at a point in time
-assessing suitability to be contracted & risk (to MGA and Carrier)
Monitoring – for ongoing suitability
-identify patterns to detect and prevent harm to consumers

5. New CLHIA Reference Document
“Insurer Systems for Monitoring Statutory Compliance of Advisors”
Describes procedures for monitoring compliance with statutory licensing requirements
ON Reg. 347, s.12
New reference doc related to CLHIA G8 – Advisor Suitability
(… to be licensed/contracted initially, and on-going… )
Insurers - required to have a compliance system that is reasonably designed to ensure that each agent complies with the Act, the regs, and the agent’s licence.”
Not much information from carriers on how this will be rolled out (or down – to MGAs). Most were just finding out about it!
Empire supervision bulletin

6. What’s in scope? 1. valid licence
2. advisor disclosure (managing conflicts of interest)
3. CE
4. E&O
5. Needs bases sales process
6. Privacy & AML compliance programs
Valid – at contract, expiry, during period
Might ask for copy initially when contracted; f/up or verify annually for copy (25 min)
CE - f/up or verify annually for copy (25 min), FSCO says ‘at least’ – and they’re checking!
E&O - at contract, expiry, during period (25 min)
NBS – insurers to ask for description at contracting, during period for specific.
To focus on stat require and/or The Approach (and IVIC equivilant), and replacement requirements.
Privacy compliance program includes privacy consent!

7. Will you be audited? Some chosen based on risk, some random
Would you be considered a ‘risky’ broker?
Time to get your compliance ‘house’ in order; then BAU
Risky ?
Newly contracted
Complaints/investigations
Lots of leveraging
Non-registered investments
Volume of business
* Refer to the CL playbook

8. Who else is asking? Sun life has a new process
Brokers with outside business activities will ask asked to provide most of these compliance elements
Carriers who sponsor agent licences will be held accountable
So will carriers you do business with

9. FSCO and E&O CAILBA met with FSCO a few weeks ago
Discussed their intentioned measures to improve agent compliance with requirements to maintain adequate E&O.
Compliance hovers around 90% - should be 100%!

10. Watch for email this fall
Agents will see consequences of non-compliance ratchet up, including administrative monetary penalties (AMP)
-Carriers will also be held accountable (Reg. 347)
Agents will be required to tell FSCO which carriers they do business with
-FSCO not proceeding with designating ‘primary insurer’

11. E&O a concern in other jurisdictions
SK, July 27, 2016: Effective September 1, 2016, those who allow their mandatory E&O policies to lapse will be subject to a minimum base fine of $1,000 for each lapse.
BC, Notice from June 2015:
Use of single blanket E&O policy by multiple agencies
E&O policy limits must be specific to insurance
Licensed agents holding administrative assistant’s coverage
FSCO following the lead of both SK and BC, similar concerns from other regulators.

12. Results of FSCO agent exams
Common findings:
inadequate needs analysis documentation
no letter of engagement/not documented adequately
failure to disclose all carriers an agent does business with
lack of written documentation of conflicts of interest.
214 completed between April 2015 & March 2016

13. Questions? Expert panel reviews:
Regulation of MGAs
CCIR - Framework for Cooperative Supervision in Canada
Insurance and securities regulators sign MOU
Expert panel reviews:
Proposed regulation of financial planning
FSCO mandate
-Non-sponsored life insurance agents must indicate a primary insurance company
-Updates to ON Insurance Act – directly impacts insurers, effective July, 2016