FSRA details misconduct by licensed agents

By Staff | July 20, 2020 | Last updated on July 20, 2020
2 min read

Over a period of roughly ten months, insurers submitted 52 complaint forms related to agent misconduct to the Financial Services Regulatory Authority of Ontario (FSRA). FSRA published a summary of the results in a report on Friday.

The forms, called life agent reporting forms (LARFs), are proposed by the Canadian Life and Health Insurance Association, the report said, and insurers are “advised” to complete and submit them as a way to report unsuitable agents to the regulator.

Insurers submitted the 52 LARFs between June 8, 2019, and Mar. 31, 2020 — the period from FSRA’s launch to its fiscal year-end.

Most of the 52 forms included multiple types of misconduct, with 96 types reported overall.

FSRA took action in 75% of the cases through letters of warning (after which the case is closed), further investigation and regulatory enforcement.

Specifically, letters of warning were issued for 44% of the cases (23 forms), while 31% (16 forms) were escalated, the report said.

Eight of the letters of warning were issued for insufficient continuing education credits, and six involved forgery and fraud. Only one involved product suitability (and the agent in the case resigned).

A further 25% of the 52 forms (13 forms) were closed with no action  — mainly because there was insufficient evidence (3 forms), no consumers were harmed financially (2 forms) or FSRA had no jurisdiction (8 forms).

FSRA has no jurisdiction when, for example, the misconduct occurs in another province or when an agent is dually licensed and the misconduct relates to another regulator.

When cases are closed with no action, FSRA still red-flags them.

“FSRA continues to monitor enforcement activities taken by other jurisdictions to assess the suitability of the agent and determine if further action is required,” the report said. “In addition, the flagged file will also be reviewed again when it is time for the agent to renew his/her licence.”

The 16 escalated cases included “pervasive misrepresentation to insurers and clients, fraudulent misconduct including misappropriation of client funds, fronting for unlicensed entities, unlicensed activities and trafficking in life insurance,” the report said.

The regulator said its enforcement tools include licence revocation or suspension, and administrative monetary penalties as high as $100,000 for individuals and $200,000 for corporations.

FSRA will continue to encourage insurers to file LARFs, and to pursue regulatory actions where evidence exists of non-compliance and consumer harm, the report said.

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.