The Financial Services Regulatory Authority of Ontario (FSRA) has been up and running for less than a year, and it’s already cut regulatory guidance by more than half. The biggest cuts were to life and health insurance, where 73% of guidance (112 items) was axed — a move that industry participants expect to result in greater efficiency.
In an emailed statement, FSRA said the axed guidance was dated or no longer relevant to guide conduct, and will “allow licensed life agents to access relevant information more seamlessly.”
Susan Allemang, director of policy and regulatory affairs at the Independent Financial Brokers of Canada (IFB) in Mississauga, Ont., supported the changes.
“Insurance licensees need to feel confident when they consult the guidance posted to the FSRA website that these documents are current and reflect today’s regulatory expectations,” she said in an emailed statement.
The regulatory reduction also serves advisors as entrepreneurs, she said.
“Many small firms and independent financial advisors have felt the impact of the surge in regulation and compliance over the past 10 years, particularly on the increased time and cost” to meet requirements, Allemang wrote. “The regulatory burden on small businesses is disproportionately high, given their more limited resources.”
Advocis, the Financial Advisors Association of Canada, said it had no consumer protection concerns, because the reductions reflect outdated or supplanted guidance.
In an emailed statement, Greg Pollock, president and CEO at Advocis, said FSRA’s regulatory approach “has been highly effective in reducing red tape for agents and insurance companies while ensuring consumer protection is uncompromised.”
Brent Mizzen, assistant vice-president, market conduct policy and regulation at the Canadian Life and Health Insurance Association, also supported the cuts while noting that guidance duplication and overlap was eliminated.
In addition to the cuts, FSRA streamlined its guidance into four categories: interpretation of regulations and rules; information for those regulated; FSRA’s approach to supervisory action; and its reasoning for decisions. The categorization helps remove some confusion for advisors, Allemang said.
Guidance will be reviewed every three to five years. FSRA will continue to focus on reducing regulatory burden, as well as modernizing systems and processes, as it fulfils its 2020-21 mandate, the regulator said in its update report outlining the reductions.
Service standards and statement of market conduct
Inherited service standards will also receive a makeover. FSRA said it will share new service standards later this year that will measure the regulator’s effectiveness in meeting its objectives and those of stakeholders. The standards will include developing new customer service principles, best practices and a review process.
The inherited standards lacked accountability, responsiveness and transparency, FSRA said in its update report.
Allemang said the IFB commends the regulator for prioritizing service standards. “Licensees should be assured of prompt, consistent direction when contacting FSRA directly,” she said.
FSRA is also working with the Canadian Council of Insurance Regulators to revise and streamline the annual statement of market conduct, which insurers are required to complete.
“This work will include clarifying and in some cases eliminating questions,” FSRA said in its emailed statement. Of 994 data points, 242 have been removed, it said, and the new annual statement would be published “in the near future.”
Allemang suggested sharing the survey results, while maintaining insurer anonymity.
“There are a number of data points of interest to advisors and industry stakeholders,” she said. These include data related to compensation, incentives, client complaints and persistency ratios.