The CRTC, your new regulator

By Deanne Gage | August 15, 2008 | Last updated on August 15, 2008
5 min read

If you think the CRTC’s do-not-call legislation won’t affect advisors beyond avoiding those pesky window cleaners, you could be in for a surprise when September 30 arrives.

First the good news: calls to existing clients are exempt from the legislation — provided you’ve been in contact with these clients within 18 months.

Now, the not-so-good news. Calls to prospects and referrals are affected.

Here’s how the legislation will work for prospects. Since advisors fall under the CRTC’s definition of a “telemarketer”, (one that uses the phone to sell products and services to new and existing clients, to prospect for new clients or to sell or prospect, directly or indirectly for yourself or another party), they must register as such.

Then prior to making phone calls to prospects, advisors must check those digits against the national do-not-call list (DNCL). Numbers on the list cannot be called, but for numbers not on the list, it’s business as usual.

Scrubbing the list certainly doesn’t come cheap, time-wise or financially. For a company doing national telemarketing, for instance, the annual fee (which includes all area codes) is over $11,000. However, most advisors are likely to opt for one of two options: paying 50 cents a phone number for up to 100 numbers, regardless of area code, or purchasing lists of a few area codes every month, three months or twice a year. The latter option would cost a few hundred dollars. (The fees go to the third party who is operating the DNCL.)

There’s still some debate as to who’s on the hook for these sign-up fees. Later this month, the CRTC will release a bulletin addressing the principal agent agreement of the financial services industry.

Sandra Kegie thinks it should be the dealer, as principal agent, should be ultimately responsible. “Through regulation, the advisor doesn’t exist without the dealer,” she says. “Then I think mutual fund dealers will download the year costs to the rep so it will be an add-on to any compliance charges [advisors] are already paying.”

In the case of independent agents who only sell insurance, they likely will have to register and pay the fees themselves.

And these fees won’t take long to add up, notes Susan Allemang, regulatory affairs with the Institute of Financial Brokers. “If your business operates in an area where there are five area codes and if you took a year’s subscription, it’s about $650 per area code,” she says. “For five area codes, it’s going to cost you an extra $3,000 a year to check the DNCL.”

Allan Wong runs a Thornhill, Ont.-based MGA, and personally trains new insurance agents. He notes his rookies all cold call, usually 100 phone numbers a day. And checking the DNC list for those 100 numbers will cost the agent $50 a day or $250 a week, upfront.

“We try to get five appointments out of the 100 people we call,” he says. “Now we’ll have to find 100 people who are not on the DNCL which also makes the process longer and tedious. This legislation makes it one step harder for people to survive in our industry. For a lot of new agents, it’s another roadblock for them to overcome.”


Fortunately, most advisors don’t cold call anymore to drum up business. But everyone uses personal referrals — the best way to get new clients these days. Today’s referral process goes something like this: you receive names and phone numbers of referrals from valued clients. The clients give their friend, colleague or family member a heads up that you will be phoning. You phone the referral to set up an appointment.

This procedure will no longer suffice as of September 30. Instead, you’ll need what the CRTC calls “explicit consent” directly from the referral. This can be written or oral consent. If the latter, it’s a good idea to have it verified by a third party.

“A lot of advisors are thinking that personal referrals are not cold calls but under the CRTC legislation they are,” Allemang notes. “The referral would have to call the advisor directly and say, ‘It’s OK for you to speak to me.’ Now that is much less likely to happen because of the hassle and now the potential client has to make the effort to call the advisor and give the advisor permission to phone.”

Then there’s the matter of warm leads, people who fall somewhere between strangers and referrals. Heather Phillips, vice-president and compliance officer at Armstrong & Quaile, says the firm is sending out a survey to find out how its 175 reps are currently prospecting for business. “Once we have the answers to that question, we can put policies and procedures in place,” she explains.

What are the consequences if you chose not to abide by the CRTC rules? If the referral or prospect doesn’t complain that you called, nothing, since the DNCL will be enforced by consumer complaints.

But if the person reports you, fines start at $1,500 per individual and can go as high as $15,000 per company — definitely significant enough to not take the risk. According to Nancy Webster Cole, senior manager, telemarketing regulations at the CRTC, all complaints will be investigated. Consumers filing a complaint will be asked if they purchased anything from the company recently or within six months.

Assuming the answer is no, the CRTC will then confirm the accused telemarketer is subscribed to the telemarketer list. “We really want to encourage people to comply with the rules,” she says. “Every case will be handled differently depending on the situation.”

If the telemarketer hasn’t signed up, Webster Cole says the CRTC “will contact them and tell them there’s a complaint and by the way, you haven’t subscribed. You have so many days to sign up and please respond to us. If it happens again, we could impose a monetary fee.”

She expects complaints will be dealt within 30 days.

Having said that, she emphasizes that consumers also need to understand that “putting your name on the DNCL doesn’t means calls will end the next day.” Telemarketers have 31 days to update their calling lists.

Deanne Gage