Our investigation into banned advisors has put the spotlight on a number of systemic but easily avoidable regulatory deficiencies. Left unaddressed, these deficiencies could negatively impact investors.
Haven’t read our investigation? Go here.
Here are five key recommendations that have come out of our research:
1. Inform consumers about multiple registrations
Insurance regulators should consider including a disclaimer on their agent lookup landing pages indicating licensed persons may have multiple registrations, and that consumers should consider searching the CSA database, among others, for disciplinary actions.
“We would certainly consider that,” said Ron Fullan, executive director of the Insurance Councils of Saskatchewan, in an email. “I’d have to consider where we’d put it, but we would certainly support consumers being aware of the possibility of multiple licences.” Ontario has also said it would consider adding a disclaimer along these lines. P.E.I. and B.C. wrote that they would consider adding links to CSA, IIROC and the MFDA on their sites.
Other insurance regulators were less open to the idea. “At this time, the ICM [Insurance Council of Manitoba] is not contemplating a broad disclosure to consumers with respect to other licensing bodies,” executive director Erin Pearson said via email. And the Autorité des marchés financiers told us it “is not considering this issue at this time.”
Kelly Morris, a partner at Borden Ladner Gervais in Toronto, says she doesn’t think there’s any legal risk in adding such a disclaimer. “Potentially, the concern would be that then you start having consumers phoning and asking what else they should be checking, and [the regulators] probably don’t want to be engaged in that.”
Number of people permanently banned by MFDA, who maintained their insurance licence for at least six months after the ban.
Sources: MFDA enforcement database; provincial insurance regulatory databases.
2. Add disciplinary actions to agent/broker profiles
Not all provincial insurance regulators list their own disciplinary actions in their online agent/broker profiles. We found at least three provincial regulators that don’t currently list this information in profiles, or don’t do so consistently:
- Insurance Councils of Saskatchewan
- FSCO (some infractions were listed on agent profiles, others were not)
- Alberta Insurance Council
Saskatchewan is aware of the importance of having this detail on profile pages. “We are in the midst of a project to re-do our entire database system, with an anticipated implementation by year-end,” says Fullan. “Having the [disciplinary] actions appear on the profile page is one of the upgrades that is included in that project.”
We found that, in general, agent/broker profiles were thin on information that would be relevant to a consumer doing due diligence. For instance, in most cases, there is no indication of how long an agent/broker has been in the insurance industry—useful information for consumers who may want to verify claims of an agent who touts 20 years of experience.
Number of people permanently banned by IIROC who maintained their insurance licence for at least six months after the ban.
Sources: IIROC disciplinary case database; provincial insurance regulatory databases.
A natural extension of this idea would be to have MFDA and IIROC disciplinary actions noted in agent/broker profiles on insurance regulator websites. However, there are legitimate hurdles to doing so. Gerald Matier, executive director of the Insurance Council of B.C., explains one of the most important: “[I]f Council has determined that the disciplinary action taken by another regulator does not affect the individual’s suitability to hold an insurance licence, then it is questionable whether Council would have the authority to publish such information on its website.”
3. More MOUs
Currently, the MFDA has information-sharing Memoranda of Understanding (MOUs) with FSCO and the Saskatchewan Life Insurance Council. IIROC has at least a dozen MOUs with Canadian and international regulatory bodies, including FSCO and the Chambre de la sécurité financière, and is “pursuing more” such agreements. (Update: as of June 20, 2016, IIROC has a MOU with the Insurance Council of B.C.)
It’s encouraging to see both IIROC and MFDA are aware of and taking proactive steps to correct the problems discussed in this investigation. We will be examining next year’s data to see if these steps bear fruit.
Number of disciplined persons who do not show up in the National Registration Database.
Sources: Both IIROC and MFDA, 2013-2015; not necessarily insurance registered. As of May 26, 2016.
4. Improve accuracy of CSA database
This investigation turned up a lot of hair-raising finds; one of the most egregious is the gaps in CSA’s database.
As of May 2016, there are 51 instances of MFDA or IIROC reps whose full disciplinary records from 2013 to 2015 do not appear on their CSA profile pages.
Sure, CSA has a disclaimer saying it “does not represent or warrant” that the information on its website “is complete, timely, or accurate.” But this is the kind of fine-print liability-dodging the regulators rightly give the industry a hard time for.
Consumers who use the database expect it to be accurate and up to date.
5. A universal identification number for each registered participant
We came across several duplicate names when researching SRO disciplinary actions in the CSA and insurance databases. While the uncertainty this causes could be remedied by cross-checking other identifiers, lingering ambiguity in some cases forced us to exclude the data point altogether. Consumers working with someone registered across multiple jurisdictions could have a hard time doing research on their prospective advisor.
So, we propose a national identification number for each registered or licensed person in the financial industry that will be the same across each regulator. This will also help non-offenders who have the same name as offenders.
In response to this suggestion, CSA said it already has unique identifiers for individual registrants, but “concerns about the security of personal information currently prevent us from publicizing [them]. We are developing a new system that will replace NRD, and which will allow us to overcome some of these issues.”
Number of disciplined persons whose penalties are missing from the National Registration Database.
Both IIROC and MFDA; 2013-2015; not necessarily insurance registered. As of May 26, 2016.
The Autorité des marchés financiers can be held up as a model here; it currently allows investors to search for registrants using their NRD numbers, as well as AMF registration numbers. Regulators, therefore, could keep their own numbering system while also publicizing an NRD number where applicable.
What the regulators had to say
These responses have been presented verbatim, with edits for clarity or privacy only. The New Brunswick Financial and Consumer Services Commission and the Financial Services Regulation Division of Newfoundland did not respond to multiple requests for comment. Should we receive responses, we will post them here.
Please see our response to your questions below:
- [Q: How is MFDA transmitting information to CSA and insurance regulators?] We share information with all securities regulatory authorities in Canada (CSA Members) and have processes in place to ensure that they are aware of our enforcement and discipline activity. Additionally, all disciplinary information such as fines, suspensions and other penalties are recorded in the national registration database (“NRD”) which is a centralized database for securities registrants in Canada and tracks identified individuals. There are features within NRD that help provincial securities regulators and SRO’s like the MFDA to track individuals nationally. You may want to contact one or more of the provincial securities regulators for further information.
- [Q: Would MFDA consider attaching an identification number to each registered person so they can be tracked across all registrations, in collaboration with CSA?] These features also allow the CSA to centralize and publish information on disciplined registrants through the Disciplined List website: https://www.securities-administrators.ca/disciplinedpersons.aspx
- With respect to insurance regulators we regularly provide information about our enforcement and disciplinary activity which may be relevant to insurance regulators in each Province and Territory. We have specific processes in place in some provinces to provide this directlyand we are currently working on such arrangements in other provinces. In the interim, our discipline information is communicated publicly and is available to insurance regulators in those other provinces.
- We are also aware that provincial insurance regulators make available a single, centralized list of disciplined person in the insurance field. To the extent that any process changes are necessary to allow insurance and securities regulators to coordinate information on specific individuals we would be supportive. The MFDA is currently able to achieve this for its purposes.
- [Q: Are you able to comment on that fact that (redacted) persons MFDA banned between 2013 and 2015 were at some point, or continue to be, eligible to sell insurance at the same time as they were under a ban?] We are aware of these situations. Our goal is to work with Provincial insurance regulators to ensure that individuals under the insurance regime are held to the same standards and subject to the same level of enforcement as securities registrants, and we are taking proactive steps to achieve this goal together with the insurance regulators.
Ian Strulovitch, LL.B., LL.L.
Director, Public Affairs, Mutual Fund Dealers Association of Canada
What is the process of transmission for IIROC’s MOU with FSCO?
The agreement we signed with FSCO to share our decisions and sanctions will provide more effective regulation and strengthens consumer protection in Ontario. Now, all IIROC decisions and sanctions will be transmitted to FSCO and all FSCO decisions will be transmitted to IIROC. Under the agreement, each regulator will be aware of and be able to assess the fitness of those individuals applying for registration based on their previous disciplinary records. Also, if an individual has been sanctioned by FSCO and is currently registered with IIROC,we will review and assess the sanctioned individual’s activities which may result in an investigation or other appropriate action.
How often does it (transmission) happen?
When IIROC decisions and sanctions are published, they will be transmitted to FSCO.
How long does it take?
IIROC decisions and sanctions will be transmitted to FSCO soon after being published.
How will disciplined people be identified?
Each regulator has a process in place to ensure that a disciplined person is properly identified.
Can you comment on the fact that [redacted] registrants who were banned from IIROC between 2013 and 2015 are/were operating under the insurance banner.
Rule-breakers should not be able to simply find employment in another area of financial services without potential clients and other regulators knowing what they’ve done. That’s why we’ve been working with other authorities, to put in place formal agreements to share information, and where appropriate, trigger automatic reviews or investigations when someone with a disciplinary history applies for registration with another regulator. For example, last year we signed an agreement with Quebec’s Chambre de la sécurité financière. These types of efforts, which we are pursuing with other agencies and regulators, will better protect consumers of financial services, regardless of who regulates whom and where.
How is IIROC transmitting disciplinary information to the CSA? How long does it (transmission) take?
IIROC shares the National Registration Database (NRD) with the CSA and relevant information is recorded and available for immediate review by IIROC and the CSA jurisdictions.
Re: “soon after being published”— can you provide an approximate timeframe? Days, weeks, months?
We endeavour to send the information as soon as possible after the publication of the decision.
Vice President and General Counsel, IIROC
Canadian Securities Administrators
Please find below our responses to your questions regarding the National Registration Search:
On November 30, 2015, the National Registration Search (NRS) was changed to help retail investors more easily find and understand registration information. Improvements included:
- Link to Disciplined List information: Investors can see if a registrant has been disciplined by regulators without conducting a separate search;
- Other names of registrants now captured by an expanded search function: Investors can search for individuals or firms broadly (including alternate business names, nicknames or previous names);
- Terms and conditions: New plain language description helps investors better understand what terms and conditions mean;
- Quick Search: Investors can quickly and easily enter the name of an individual or firm to check whether they are registered today;
- Elimination of “laundry lists” of information if investors have not narrowed their search in advance of search results; and
- Removal of non-registration categories to ensure investors are clear about which individuals can deal or advise in securities.
Information regarding registrants who were registered prior to September 2009 is no longer available on NRS, however, the public can access this information from their local regulator. This historical information is not available through NRS as the system was updated to summarize registration categories across jurisdictions (precipitated by September 2009 Registration Reform) – a change that is designed to make it easier for investors to find and understand registration information.
Registration information is refreshed daily to reflect filings and applications submitted by registrants and handled by staff across the CSA. The public can see the exact date and time that this information was last updated on NRS, as per the following example:
Disciplinary information is available as per the dates listed on the Disciplined List on the CSA website. While no disciplinary information is lost, it cannot be combined alongside registration information, since the latter is not available on NRS prior to September 2009.
Disciplinary information is entered by staff across the CSA and SROs, according to internal policies and procedures determined by each regulator; the information is available as at the time the regulator entered the information.
For individual registrants, concerns about the security of personal information currently prevent us from publicizing unique identifiers. We are developing a new system that will replace NRD, and which will allow us to overcome some of these issues.
We expect the publication of unique identifiers for firms to become more prominent over time – for example, with the new harmonized form for reports of exempt distribution, which will require firm NRD numbers to be made public, along with the contents of those filings, starting June 30, 2016.
It’s important to note that CSA staff have internal controls in place, including unique identifiers for each individual or firm, to ensure that registration history can be traced continuously back as far as the inception of a shared system the CSA regulators use called the National Registration Database (March 2003).
Autorités canadiennes en valeurs mobilières / Canadian Securities Administrators
Insurance Council of B.C.
I am writing in response to your e-mails […] regarding the Insurance Council of British Columbia’s (“Council”) practice when an insurance licensee is disciplined by another financial regulator.
While Council does not comment on individual licensees and whether or not an investigation was or is being conducted, I can advise that Council was aware of each of the decisions pertaining to the individuals you have cited. I can also advise that Council has a process for monitoring disciplinary action by other financial regulators, which includes regularly reviewing other financial regulators published disciplinary decisions to determine if any are relevant to insurance licensees in B.C. This is in addition to the obligation all insurance licensees already have to report any disciplinary action to Council within 5 business days, in accordance with section 7(3)(a)(i) of Council Rules.
This process is dependent on the circumstances, and can include: creating a file for the disciplined person if he or she is not licensed with Council; obtaining information from the disciplined person if he or she is licensed with Council; liaising with the enforcing regulator on the matter; reviewing the person’s insurance practice to determine if the allegations made by the other financial regulator have relevance to their insurance practice; issuing the disciplined person a caution letter (which is not public) about his or her responsibilities as an insurance licensee; or, taking disciplinary action, which can include a reprimand, a fine, imposing conditions or restrictions on the person’s insurance licence, licence suspensions and, where required in the interest of the public, revocation of the person’’s insurance licence. It is important to note that all allegations against an insurance licensee must first be investigated and, if disciplinary action is warranted, the licensee is afforded the due process set out in the Financial Institutions Act before a decision is finalized and available to the public.
In all such cases, due process is afforded to the licensee and Council takes into consideration the nature of the offence considered by the initiating financial regulator and what sanctions were imposed, including whether the person is no longer permitted to be a registrant/licensee in the other jurisdiction.
With regards to your suggestion that Council should publically flag insurance licensee files if they have been disciplined by another regulator but not Council, this presents a number of challenges. The primary one being that if Council has determined that the disciplinary action taken by another regulator does not affect the individual’s suitability to hold an insurance licence, then it is questionable whether Council would have the authority to publish such information on its website.
Regarding your question about rejecting a licensee for renewal, insurance licensees in British Columbia do not have an expiry date. As mentioned above, Council Rules require insurance licensees to disclose any disciplinary action within five business days. Unlike some jurisdictions that only require disclosure at time of licence renewal, Council requires disclosure in a more timely manner.
And your proposal that Council consider providing links to IIROC and MFDA or recommending consumers visit these sites as well may have some possibilities. Council is currently redeveloping its website and will give this suggestion further consideration as that project moves forward.
Executive Director, Insurance Council of British Columbia
Alberta Insurance Council
Given privacy requirements, we cannot provide specific information in relation to the individuals you referenced in your email. However, I can advise that the Alberta Insurance Council and our industry specific councils (the Life, General and Insurance Adjusters Councils) deal with these types of situations in the following manner.
In the event that an existing agent discloses, or we otherwise become aware, that they have been convicted of an offence (be it a criminal code conviction or a conviction in relation to activities performed under the auspices of another license or regulatory body), the AIC corresponds with that the agent and requires that he or she provide us with information regarding the offence so that the matter can be referred to the appropriate industry council. Once the agent provides this information to the satisfaction of AIC staff, these materials are presented to the industry council that is made up of elected and appointed industry representatives and government appointed public members. It is their role to determine whether or not the conviction in question renders the agent unfit to retain a certificate of authority as set out in the Insurance Agents and Adjusters Regulation. The exception to this would be in relation to an extremely small number of convictions where the Councils have provided staff administrative direction that the convictions do not render and agent unsuitable (ie. a single conviction in relation to the possession of a controlled substance).
In determining whether or not the agent can retain their certificate of authority, the councils review the materials and take a number of factors into consideration including, but not limited to:
- The nature of the offence itself (whether it includes elements of fraud or untrustworthiness, violence, abuse or breach of trust etc.);
- The circumstances associated with its commission (the agent’s specific role, whether they pled guilty or otherwise cooperated, whether the conviction arose out of self-reporting);
- When it occurred, the existence of a previous record or previous convictions with us or another body and record following the imposition of the conviction;
- The age of the agent, his or her personal circumstances, whether there are indications of substance abuse or other factors that lead to the behaviour;
- The sentence or sanction imposed by the courts (custodial sentence, probation, prohibition orders, restitution, fines, discharge (conditional or other) or by the other regulatory body (license suspension, revocation, permanent ban, fines, cost awards etc.) and whether the individual completed and complied with the sanction conditions without incident;
- The individual’s current licensing status with that other regulatory body or jurisdiction (ie. the fact that they currently hold a license with the same body that sanctioned them may or may not be significant depending on the circumstances.)
Depending on the circumstances, the council will then either determine that the conviction does not render the agent unfit to retain a certificate, issue a decision that revokes the agent’s certificate of authority or (in rare circumstances) impose conditions on the licensee. Section 482 of the Insurance Act provides the agent an automatic right of appeal where they are adversely affected by a council decision. Appeals of council decisions are held by three person panels drawn from the Insurance Council Appeal Board of Alberta. The Insurance Councils Regulation governs the timelines and conduct of appeals. Appeal hearings are normally held by way of de novo vive voce hearings where the parties (the agent and the council whose decision is being appealed) adduce sworn evidence and the appeal panel issues a written decision that either dismisses the appeal, allows the appeal or varies the decision made by the council.
In the event that the AIC learns of a conviction other than through the self-reporting of the agent, the AIC may also initiate disciplinary proceedings against the agent for non-disclosure in addition that progress independently with the suitability processes set out above.In these cases, the specific council may levy a civil penalty against the agent even if the underlying conviction does not render the agent unsuitable. Any disciplinary decisions of this sort are subject to the same appeal processes set out above.
Warren Martinson, B.A. (Hons.), LL.B., LL.M.
Director of Legal & Regulatory Affairs, Alberta Insurance Council
Insurance Councils of Saskatchewan
First, for privacy reasons, we do not make public comment on individual licensee complaint and/or investigation files. All disciplinary actions, once finalized, are public record, and are posted to our website, as well as to the national Canadian Insurance Regulator Disciplinary Action (CIRDA) database that was established by insurance regulators across the country.
We do have procedures in place to monitor disciplinary decisions by other regulatory bodies. This includes (but is not limited to) other provincial insurance regulators, Securities regulators, and both the MFDA and IIROC. When we become aware that a disciplinary decision has been issued by another regulatory body, we do the following:
- If the person is not currently licensed in our jurisdiction, we create a flag in our system so that the disciplinary decision will be reviewed if the person should ever apply for a licence in our jurisdiction in the future;
- If the person is currently licensed in our jurisdiction, we take the following steps;
- Flag the licensee’s file by adding a copy of and a reference to the disciplinary decision on their record;
- Contact the licensee to get as much information from them as possible concerning the disciplinary decision;
- Contact any other relevant organization (including the regulator who issued the initial regulatory action) to get further information from them concerning the disciplinary decision;
- Ensure that the licensee has followed the reporting requirements in our Bylaws, and if not take appropriate compliance and/or disciplinary action;
- If the actions outlined in the original disciplinary decision represent a potential contravention of our Bylaws, conduct a full investigation and determine if any disciplinary action is warranted on our part;
- If the actions outlined in the original disciplinary decision bring into question the individual’s suitability to be licensed in our jurisdiction, convene a Suitability Hearing as described in our Bylaws.
[Q. I was wondering what you thought about adding a notice in your licensee database that consumers would see, and which would suggest that they should also consider doing a search on the CSA national database. That would allow them to see if the insurance licensee they are looking up on your site has previously been disciplined by MFDA or IIROC.]
We would certainly consider that. I’d have to consider where we’d put it, but we would certainly support consumers being aware of the possibility of multiple licences.
We are in the midst of a project to re-do our entire database system, with an anticipated implementation by year-end. Having [enforcement] actions appear on the profile page is one of the upgrades that is included in that project.
Executive Director, Insurance Councils of Saskatchewan
Insurance Council of Manitoba
Information concerning disciplinary action is disclosed on the ICM website – you may access this information through www.icm.mb.ca. The ICM does not disclose information concerning pending matters, or complaints/reviews that do not result in impact to a licence or disciplinary action.
The ICM does have a process in place for disclosure of disciplinary action by other regulatory bodies, or other issues that might impact on the suitability of a licence holder.
At this time, the ICM is not contemplating a broad disclosure to consumers with respect to other licensing bodies.
Erin Pearson, BA, FLMI, FALU
Executive Director, INSURANCE COUNCIL OF MANITOBA
Financial Services Commission of Ontario
Q1. Please confirm what “Authorized to sell,” “expiry date” and “activity date/type” mean (when activity = renewal).
A1. Authorized to sell: means an Agent can lawfully conduct business for which a licence is issued.
Expiry Date: the date the licence expires—means the agent is no longer authorized to sell.
Activity Date: means date of the last licensing activity.
Activity Type: means the last activity on the licence (e.g. New, Renewal, Transfer application).
Q2. [redacted] Was FSCO aware of the disciplinary actions against [certain] licensees? Have you flagged their files in any fashion or initiated independent investigations/disciplinary actions? If not, why?
A2. FSCO actively monitors disciplinary action taken by other regulators or jurisdictions as part of determining the suitability of new applicants and existing licensees. This activity is triggered through different channels, for example: a complaint made by an employer or member of the public, a notification by another regulator, such as IIROC (in which FSCO has an MOU in place to exchange enforcement information) or by disclosure provided on FSCO’s licence application forms. In some circumstances, FSCO cooperates with other financial sectors or jurisdictions in cases where the same licensed individual is being investigated by more than one regulator or jurisdiction.
To maintain the integrity of all of our investigations, we neither confirm nor deny the existence of any complaint or investigation, nor do we comment on any specific ongoing matters. FSCO publishes any enforcement actions on our public website. However, once FSCO is made aware that a licensee has been disciplined by another regulator or jurisdiction, the following steps are undertaken:
- A review is undertaken that may involve contact with the licensee as well as other parties who might have information relevant to the situation
- As part of this review, FSCO examines the evidence and assesses whether there is a likelihood that the behaviour exhibited in one financial services sector would be likely to reoccur in another sector. If so, FSCO then takes action to manage the risk of any potential for harm to consumers and public. This regulatory action can take many forms, ranging from conditions being added to a licence to the revocation of a FSCO licence.
- Information about disciplinary action taken by another regulator or jurisdiction is taken into account in determining a licensing applicant’s suitability for a licence.
- It should also be noted that FSCO is not in a position to automatically take action against someone who has been disciplined by another regulator or jurisdiction. This is because FSCO does not have authority to issue reciprocal orders based on the actions of other regulators or jurisdictions, every licensee is entitled to due process under the relevant legislation and FSCO has a duty to assess the merits and circumstances of each case.
Q3. Would you consider including a disclaimer in your database that licensed persons may have multiple registrations and that consumers should consider searching the National Registration Database for the status of those registrations?
A3. As part of our continuous improvement, FSCO regularly examines ways of increasing public awareness through different communication channels including our website, social media and exchange of information with other regulators. Your suggestion about a referral to the National Registration Database on FSCO’s website is one that will be taken into consideration.
Q4. What changes have you made as a result of the 2014 Auditor General report that flagged similar issues? And your 2016 Statement of Priorities notes that you may want “all other regulated entities to submit an annual information return at a minimum.” Why isn’t this being done now?
A4. FSCO welcomed the Auditor General’s observations about life insurance agent licensing systems and procedures. FSCO is undertaking a full review and update of licensing systems that, once fully implemented, will support complete data gathering, better internal controls, improved risk assessment and better compliance.
Life insurance companies in Ontario are required by law to ensure that each agent complies with the Insurance Act, the regulations and the agent’s licence. This includes ensuring that agents maintain required Errors and Omissions (E&O) insurance coverage. Based on recommendations from the Auditor General’s report, FSCO has undertaken a number of improvements to increase accountability in the insurance sector in this area.
So far over 94% of all insurance agents have reported to FSCO on their E&O insurance coverage. We are evaluating our next steps to improve the rate of reporting.
FSCO has already implemented Annual Information Returns for the mortgage broker and health service provider sectors.
As a member of the Canadian Council of Insurance Regulators (CCIR) FSCO is collaboratively working on developing a market conduct supervisory framework for the insurance sector in Canada. As part of this framework, supervisors across all provinces and territories will identify cooperative supervisory activities and develop cooperative supervisory plans.
The processes and procedures to support this cooperative supervisory framework are built upon a Memorandum of Understanding and Protocol on Cooperation and the Exchange of Information and set out guidelines, roles, and responsibilities that will support cooperation and collaboration among the CCIR members. CCIR has already begun a process to identify cooperative supervisory and information gathering activities.
Q5. What actions by a licensed person trigger the MOU with IIROC?
A5. IIROC and FSCO regularly share information about disciplinary action taken by our respective organizations. According to the MOU, IIROC and FSCO will also, where appropriate, conduct joint investigations and share relevant records and documents when both regulators are investigating the same individuals. FSCO has also had an MOU, which operates in a similar manner, with the Mutual Fund Dealers Association since 2014.
Q2. In [certain cases], there is no mention of the licensee’s past disciplinary history [on] their FSCO listing (via Licensing Link). Why is that?
A2. Licensing Link provides the current status of the any licenced individual or business, and this is the most relevant information that a consumer requires. All of our enforcement actions are posted on FSCO’s public website.
As part of our continuous improvement, FSCO regularly examines ways of increasing public awareness through different communication channels including our website, social media and exchange of information with other regulators. Your comment about linking past disciplinary history with the current FSCO listing for licensees will be taken into consideration.
Q3. Would you support a national identification number for all financial licensees to facilitate better/more accurate information sharing between bodies and with the public?
A3. As a member of the Canadian Insurance Regulatory Services Organization (CISRO), FSCO is collaboratively working with other insurance regulators to develop effective and efficient oversight of intermediaries for the insurance sector in Canada. As part of this approach, supervisors across all provinces and territories will identify priorities and develop the best strategies to implement them, taking into consideration the different rules and requirements across jurisdictions.
FSCO has also established a number of Memorandum of Understandings (MOUs) with insurance and other financial services regulators that will allow, where appropriate, FSCO to conduct joint investigations and share relevant records and documents when both regulators have oversight of the same individuals.
In addition, since December 2013 consumers and insurance industry participants have one-stop access to the Canadian Insurance Regulators Disciplinary Actions (CIRDA) database. This is a joint initiative between CISRO and the Canadian Council of Insurance Regulators (CCIR).
Disciplinary actions taken against insurance intermediaries across many jurisdictions are contained in the CIRDA database and are presented in the same format as they currently appear on individual regulatory websites. The database can be accessed at http://decisions.cisro-ocra.com/.
Senior Communications Officer, Issues and Media, Strategic Communications Branch,
Financial Services Commission of Ontario
Autorité des marchés financiers
[Q. We found numerous people disciplined by IIROC (e.g. [redacted]) who appear in your database; in such cases, do you flag their files?]
As you may know, the Investment Industry Regulatory Organization of Canada (“IIROC”), a national self-regulatory organization (“SRO”) recognized as such in Québec by the AMF, which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada, also pursues a regulatory mandate, in particular by testing for compliance with and enforcing a broad spectrum of rules. In particular, IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces. The AMF shares information with IIROC on a regular basis.
By virtue of section 83 of the Act Respecting the Autorité des Marchés Financiers, CQLR, c. A-33.2 (“AMF Act”), a SRO such as IIROC shall, as soon as possible, communicate to the AMF its decisions rendered in the exercise of its functions and powers concerning the admission of a member or a disciplinary matter.
Specifically, the AMF monitors the disciplinary decisions rendered by IIROC by placing under watch the representative referred to in the decision. A note is then indicated to the representative’s file and any new requests submitted to the AMF will be analyzed accordingly, particularly in the case of an exercise application in a discipline governed by the AMF.
[Q. Do you initiate your own disciplinary actions against them?]
The AMF will initiate an administrative process in the event that the representative referred to in IIROC’s decision also has a right of practice in a discipline governed by the AMF. In such cases, the AMF may conduct an analysis of the decision to determine whether the offenses charged affect public protection in relation to the representative’s right of practice. If so, the AMF may then decide to impose conditions to the representative’s right of practice, to refuse its renewal or to revoke its right of practice, etc., depending on the particular circumstances of each case pursuant, in particular, to the provisions set out in the Securities Act, CQLR, c. V-1.1.
[Q. We are also wondering why the IIROC disciplinary action is not visible on the registrant’s online profile on the AMF website. Would AMF consider linking out to IIROC enforcement documents?]
IIROC’s Website provides a database containing public disciplinary-related information about IIROC-regulated firms or individual registrants.
The National Registration Database (“NRD”) is a Web-based system that enables companies and their representatives operating in Canada to file their registration forms and renew their right to practice electronically.
As mentioned above, by virtue of section 83 of the AMF ACT, IIROC communicates to the AMF its decisions rendered with respect to the admission of a member or a disciplinary matter. Pursuant to section 34 of the AMF Act, the AMF issues a weekly bulletin intended for financial sector participants and consumers of financial products and services containing information required for publication under the laws administered by the AMF. The practice established by the AMF is to publish the disciplinary decisions rendered by IIROC in its Bulletin to make them readily available to the public on its Website.
[Q. Would AMF consider including a disclaimer on the landing page for the database suggesting that licensed persons may have multiple registrations and that consumers should consider searching the CSA database for disciplinary actions?]
In response to the question pertaining to the possibility of including a disclaimer on the landing page for the database, please take note that the AMF is not considering this issue at this time.
Directeur des relations médias
Autorité des marchés financiers
Nova Scotia Office of the Superintendent for Insurance
We monitor insurance licensees who may have been subjected to disciplinary actions by other regulatory and law enforcement bodies. This can also be triggered through various channels such as notification by a company sponsor, a client or a public member.
As a regulatory body, if we learned that a licensed individual has been disciplined by other regulatory bodies or if there are reasons to conduct an investigation, we will initiate our own review. We will gather the facts as well as review the decisions of the regulatory bodies. Of course each situation can be different but it would generally include contacting the licensed individual, employer or anyone who has filed a complaint along with reviewing the office file. Based on the facts of the situations and laws and rules pertaining to the case, we would decide on the course of action affecting the status of the licenses.
For privacy reasons and to maintain the integrity of our reviews, we do not comment or disclose specifics on whether we are conducting a review or investigation on an individual or an agency.
Krista Higdon, media relations advisor
In Nova Scotia, licensees are required to disclose at the time of application if they have ever had any license or registration of any kind refused, suspended, revoked or subject to a disciplinary hearing.
Our license renewal cycle is every three years but the Superintendent’s Office receives updates from other regulatory bodies, including the MFDA, regarding disciplinary action taken on advisors or brokers.
In addition to other regulators, an agent license is sponsored by an insurance company and the insurer is required to notify the Superintendent’s Office for any reasons to terminate sponsorship.
Nova Scotia’s Superintendent’s Office would conduct their own review on the agent/broker based on the information provided by another regulatory body’s decision. Following the review, if an investigation is deemed warranted, it would be conducted in full to determine the appropriate action.
[Q. If the renewal date for an applicant was, say, Jan. 1, 2016, but he was he disciplined by IIROC or the MFDA starting Jan. 20, 2016, yet didn’t disclose this until Jan. 1, 2019, is that okay under your rules?]
In this situation, the applicant would not be required through our regulations to disclose disciplinary action of another regulatory body, but the sponsoring company does have a responsibility to report any terminations or changes to the Superintendent’s Office regarding an agent they sponsor, whether the information is internal or from other regulatory bodies.
While the Office of the Superintendent does not have the authority to impose orders issued by other regulatory bodies, the Office would conduct a review based on the authority granted under the Insurance Act and make a decision based on the merits of the case.
Our regulations can be found here: http://www.novascotia.ca/just/regulations/regs/iagent.htm.
Marla MacInnis, spokesperson, Nova Scotia Dept. of Finance and Treasury Board
P.E.I. Department of Justice and Public Safety
For privacy reasons we do not comment on complaints/investigations involving individual licensees unless they are ultimately disciplined by our office.
Our insurance agent application (both initial and renewal) requires the applicant to disclose whether they have ever been subject to discipline or are currently the subject of an investigation by a regulatory authority. In addition, we do receive and can access independently, disciplinary decisions of other regulators. Finally, insurers have a duty to “monitor and report” regarding their agents. Therefore, insurers routinely immediately withdraw sponsorship of individuals found by a regulator to be “unsuitable to be licensed/registered.” This immediately makes the license invalid.
If another regulator takes disciplinary action against one of our licensees we immediately assess the situation to determine what, if any, action is required by our office. One important factor considered is whether or not the applicant has been found to be “unsuitable to be licensed/registered” by that regulator. If the applicant has been deemed not to be suitable, it is more likely that we would conclude in a similar manner.
Our licensing system allows us to flag agent files as necessary.
We do not plan to issue a disclaimer. However, adding additional links to licensing related databases may be useful as we update our website.
Compliance Officer, Department of Justice and Public Safety, Province of Prince Edward Island