FSCO proposes guideline to treat clients fairly

If you’re licensed to sell life insurance or segregated funds in Ontario, you may soon have new requirements to treat clients fairly. The Financial Services Commission of Ontario (FSCO) has published for comment its proposed Treating Financial Services Consumers Fairly Guideline, which aims to ensure a common understanding among licensees and registrants of how to […]

By Staff | April 4, 2018 | Last updated on April 4, 2018

2 min read

If you’re licensed to sell life insurance or segregated funds in Ontario, you may soon have new requirements to treat clients fairly.

The Financial Services Commission of Ontario (FSCO) has published for comment its proposed Treating Financial Services Consumers Fairly Guideline, which aims to ensure a common understanding among licensees and registrants of how to treat customers fairly throughout a financial product’s life cycle.

Read: Is regulatory uncertainty the new norm for Ontario?

The proposal is aimed at firms licensed or registered by FSCO in the insurance, credit union/caisse popular, loan and trust, and mortgage brokering sectors. Eight expectations are outlined for treating consumers fairly, including acting with due skill, care and diligence; promoting products and services in a clear and fair manner; recommending suitable products; and disclosing and managing conflicts.

In a release, FSCO says its proposal aligns with international standards and with similar national supervisory efforts. But some industry participants don’t think the proposal goes far enough.

“A guideline is OK, a law is better,” says Ken Kivenko, president of Kenmar Associates, in an email to Advisor.ca. He says an “enforceable” fiduciary duty for all advisors who provide personalized financial advice is what Ontarians need. “Anything else is suboptimal.”

FSCO says it intends to release a final guideline “later this year.”

If that happens, the guideline will come just ahead of the Ontario government’s creation of a new regulator to replace FSCO.

Read: Investors want a best interest standard

In its budget released last month, the Ontario government says it continues to work to create the Financial Services Regulatory Authority of Ontario, or FSRA, which will replace FSCO and be a more “adaptive” regulator for consumers, investors and pension plan beneficiaries.

Written comments to FSCO’s proposal can be submitted to marketconduct@fsco.gov.on.ca by May 8, 2018.

Read the full FSCO proposed guideline.

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