ID
2022-015

Type
Rules
Sector
Cross Sector
Status
Public comment closed
Date
Comment Due Date

Thank you for providing your feedback on FSRA’s proposed Fee Rule.

We appreciate the comments and questions received to date. Your feedback will help to inform our final rule.

The request for submissions is now closed.


FSRA is proposing changes to the rule that governs the way it assesses and collects fees from the sectors it regulates. This is to align with FSRA’s updated Fee Rule vision and principles, such as fairness, consistency, and transparency. 

The Proposed Fee Rule will maintain low administrative burden, ensure the sectors are bearing their own costs, and help the regulated entities better understand how their fees are calculated.

FSRA is making these changes to ensure fees appropriately and accurately reflect the regulatory efforts and activities required to enhance consumer protection.

FSRA committed to revisiting and reviewing the 2019 Fee Rule three years after coming into force.

In order to ensure an open and transparent process, FSRA is launching a 90-day public consultation.

FSRA is now seeking feedback on the proposed Rule 2022 – 001 Assessments and Fees from all stakeholders. The consultation will close on Monday, February 27, 2023.

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Sector Comment Date posted Sort ascending
Financial Planners and Advisors
[2022-015] NA - New Self-Regulatory Organization of Canada

Cross Sector
[2022-015] Julie Nolette - Intact Insurance

Life and Health Insurance
[2022-015] Brendan Wycks - CAFII
February 27, 2023

Mr. Mark White, CEO
Financial Services Regulatory Authority of Ontario
25 Sheppard Avenue West, Suite 100
Toronto, Ontario
M2N 6S6
[email protected]

RE: Proposed FSRA Rule 2022 – 001: ASSESSMENTS AND FEES

Dear Mr. White:

The Canadian Association of Financial Institutions in Insurance (CAFII) thanks the Financial Services Regulatory Authority (FSRA) of Ontario for the opportunity to provide feedback comments on proposed FSRA Rule 2022 – 001: Assessments And Fees.

Our feedback will be relatively brief, largely because only certain aspects of the proposed amendments to Rule 2019 – 001 – Assessments and Fees (the 2019 Fee Rule) are germane to the life and health insurance sector in which CAFII members operate; and because we have previously communicated our support for FSRA’s foundational approach to assessments and fees (as established in the 2019 Fee Rule).

That said, we have the following points of feedback to offer.

As an overarching feedback comment, CAFII notes, with some concern, that Rule 2022 – 001 proposes to remove the ‘Principle of Predictability’ from the 2019 Fee Rule’s Vision & Principles. We view that particular Principle as a foundational, cornerstone feature of a transparent and fair regulatory fees regime; and we therefore strongly encourage FSRA to retain it.

Predictability is one of the guiding principles in Ontario’s Burden Reduction Directive, a government-wide imperative that “sets out the Ontario government’s burden reduction and regulatory modernization expectations, requirements, and responsibilities.” Predictability is also the sine qua non of a sound regulatory regime, an essential aspect which encourages compliance and helps business entities in the regulated sectors to plan for change.

With respect to Part 2 – Sectoral Assessment Process, the proposed amendments include the following: “With respect to the preparation of budgets by FSRA, the requirement to post a draft budget on the FSRA website has been removed and replaced with a requirement to consult with the regulated sectors as part of FSRA’s annual business plan process (Vision & Principles 1.2; 6.1).”

CAFII strongly encourages FSRA to reconsider the removal of the requirement for the Authority to post a draft budget on the FSRA website. In the interests of full transparency, we believe that it should be incumbent upon FSRA both to post a draft budget – in the first instance, before consulting with the regulated sectors on the annual business plan process (which is a related but separate area for review/scrutiny and feedback) – and then to consult with the regulated sectors on it.

In other words, it is our view that this annual process can only be optimal and produce a good, mutually beneficial outcome if it is not an ‘either, or’ between those two elements, but rather a ‘both’ and in the right sequential order. After all, how can the regulated sectors be in a position to provide constructive, meaningful feedback to FSRA on the proposed budget for the ensuing year, and on the related annual business plan priorities which the budget is intended to fund, if the draft budget has not been made public and shared with them – in advance, prior to the consultation phase occurring – typically via publication on the Authority’s website?

Also in Part 2 – Sectoral Assessment Process, CAFII supports the addition of a new provision whereby “if funds are used from the operating reserve for a specific variable fee sector, then that sector shall include that cost for replacing such funds in the operating reserve as a sector-specific cost for calculating a future assessment following the withdrawal of those funds (Vision & Priorities 2.1; 3.1; 3.2).” We believe that FSRA’s stated intention to avoid cross-sector subsidization with respect to replenishment of utilized operating reserve funds – and to take a user/causer-pay approach -- is the only fair and proper way to proceed.

With respect to Part 4 – Insurance Sector Assessments and Fees, CAFII supports the following amendment as a change that will provide greater precision and certainty for the regulated sectors: “The definition of “direct written premiums” for the insurance sectors has been amended to now be recorded as they are reflected in the insurer’s most recent annual audited financial statements presented to the insurer’s prudential regulator (Vision & Priorities 4.2; 5.1).”

With respect to Part 10 – Innovation Office Fees, CAFII supports the fee table set out therein and concurs with FSRA that the proposed fees are modest and reasonable and will serve “to prevent barriers to entry for innovation opportunities (Vision & Priorities 2.1).” In addition, such reasonable fee-for-service rates should incentivize fintechs, insurtechs, and other innovators to approach the FSRA Innovation Office to take advantage of its “Test and Learn Environment.”

In a parallel vein, CAFII encourages FSRA to communicate regularly with the regulated sectors with respect to the activities of its Consumer Office and how it is funded.

More generally, we feel that FSRA continues to “walk the talk” in terms of its commitment to transparency, collaboration, and open communication with stakeholders.

Conclusion
CAFII again thanks FSRA for the opportunity to provide key industry stakeholder feedback on the
Authority’s Proposed FSRA Rule 2022 – 001: Assessments And Fees. We extend our Association’s appreciation
for FSRA’s continued commitment to open and transparent communication and consultation. Should you
require further information from CAFII or wish to meet with representatives from our Association on this
submission or any other matter at any time, please contact Keith Martin, CAFII Co-Executive Director, at [email protected] or 647-460-7725.

Sincerely,


Rob Dobbins
Board Secretary and Chair, Executive Operations Committee


About CAFII

CAFII is a not-for-profit industry Association dedicated to the development of an open and flexible insurance marketplace. Our Association was established in 1997 to create a voice for financial institutions involved in selling insurance through a variety of distribution channels. Our members provide insurance through client contact centres, agents and brokers, travel agents, direct mail, branches of financial institutions, and the internet.

CAFII believes consumers are best served when they have meaningful choice in the purchase of insurance products and services. Our members offer credit protection, travel, life, health, and property and casualty insurance across Canada. In particular, credit protection insurance and travel insurance are the product lines of primary focus for CAFII as our members’ common ground.

CAFII's diverse membership enables our Association to take a broad view of the regulatory regime governing the insurance marketplace. We work with government and regulators (primarily provincial/territorial) to develop a legislative and regulatory framework for the insurance sector which helps ensure that Canadian consumers have access to insurance products that suit their needs. Our aim is to ensure that appropriate standards are in place for the distribution and marketing of all insurance products and services.

CAFII’s members include the insurance arms of Canada’s major financial institutions – BMO Insurance; CIBC Insurance; Desjardins Insurance; National Bank Insurance; RBC Insurance; Scotia Insurance; and TD Insurance – along with major industry players Assurant; Canada Life Assurance; Canadian Tire Bank; Chubb Life Insurance Company of Canada; CUMIS Services Incorporated; Manulife (The Manufacturers Life Insurance Company); Securian Canada; and Valeyo.

Life and Health Insurance
[2022-015] Mohammad Soltani - CLHIA
Please see attached CLHIA's submission for FSRA's Consultation on the 2022 Fee Rule.
Cross Sector
[2022-015] Susan Allemang - Independent Financial Brokers of Canada (IFB)
Attached is the comment letter from IFB.
Credit Unions and Caisses Populaires
[2022-015] Andrei Belik - Canadian Credit Union Association
Please see attached.
Property and Casualty, and General Insurance
[2022-015] Kim Donaldson - Insurance Bureau of Canada
Attached is IBC's submission for this consultation.

Thank you, Kim
Pensions
[2022-015] Jason Vary - Actuarial Solutions Inc.
I believe that it should be perfectly acceptable that larger pension plans somewhat subsidize smaller pension plans. Certainly, a minimum fee makes sense regardless of the plan size, but in an effort to reduce barriers to pension coverage, I would think that this is a reasonable compromise. In addition, there should be a separate much lower fee schedule applicable to DC plans; however, even if free, I’m not sure that the payroll tax savings of a DC plan would offset the burden of increased regulation (Form 7s, AIRs, etc.) and the reality is that DC plans are simply unattractive compared to other alternatives such as Groups RRSP/DPSP programs.

Further details can be found in my blog:
https://www.actuarialsolutionsinc.com/2023/02/06/good-news-bad-news-from-fsra/
Financial Planners and Advisors
[2022-015] Mauro Lagana - Canadian Bankers Association

Pensions
[2022-015] Brad Thompson - Victim Services of Middlesex-London
I believe that you are asking for comments, perhaps about the proposed changes however I will take this opportunity to state how cost prohibitive your fees are to small non-profit agencies that are attempting to provide an attractive compensation package to our 8 employees. Our Board of Directors voted in 2017 to begin a pension plan for our staff. Since we have only 8 employees our unexpected annual fee of $750 is excessive. If this fee was known in 2017 I suspect that other compensation alternatives would have been explored instead of creating our own small pension plan through a carrier. I believe that this annual fee should be re-examined for small non-profit organizations like ours and if possible eliminated of significantly reduced. Brad Thompson - Executive Director
Mortgage Brokering
[2022-015] Michael Perretta - Assured Mortgages
Since the new system was implemented, fees have more than doubled. Inflation has NOT doubled, why the huge increase in fees? Is it possible that HUGE inefficiency in administering the ACT.....a good system for registration of members & protection of the public interest does NOT have to cost double!
As an MBA, CPA, CFP, Real Estate Broker & Mortgage Broker, I pay enough fees to maintain my licenses to earn a living.....perhaps a COST/BENEFIT analysis should have been done before implementation of of changes!
Pensions
[2022-015] David Keeling - 2012869 Ontario Inc.
I am a retired police officer and my corporation is an Independent Pension Plan registered in 2002 I have been assessed fees by the Ontario Financial Services Regulatory Authority each year since registered. My pension fund was transferred from OMERS.
I do not receive any benefits from the FSRA and it obvious that this is basically a cash grab from the Ontario Government. This became more apparent when the fees were more than doubled annually two years ago. There have been some adjustments made to these fees but is is still ostensibly an unwarrented and excessive tax.
It is difficult enough to enjoy a retirement as a fixed income pensioner. It is about time that someone started paying attention to senior citzens who have payed taxes all of their income earning years , only to be require to pay additional fees for a service that provides no bebefits.
Life and Health Insurance
[2022-015] Mark Matsumoto
I don't know exactly what you do and what's involved but there is a huge backlog that screwed up the insurance side of my business because my license didn't get renewed properly..
Therefore we're paying for something that's not working properly. How much should one pay for something that is broken?
1
Financial Planners and Advisors
[2022-015] Stephen Wiffen - RBC Wealth Management Financial Services
Good day,
I just renewed my Advocis membership yesterday and they collected the fee even though you are accepting comments into the new year. My view is that those of us who hold the professional designations you are assessing worked hard to earn the designation and pay fees to continue to hold it. If it is FSRA's position to have us in the industry (38 years and counting) hold ourselves out as professionals, shouldn't the fee be assessed to a licensed insurance agent who does NOT hold a designation rather than those of us who do hold out as professional? Personally, I feel FSRA has this backwards. Thoughts?
Thanks,
Steve
Mortgage Brokering
[2022-015] Karen Filice - Cirrius Finance Corp.
I find these fees ridiculously high. As a mortgage broker who is also a real estate broker - on the real estate side we have just been informed of a reduction in our fees to RECO. A welcome announcement. FSRAO on the other hand does no more monitoring - in fact less, than RECO but charges double. Ridiculous.
Health Service Providers
[2022-015] Dr. Simone Billing
I'm curious as to FSRA's plan to make compensation for psychological services on par with the typical hourly rate in the province. I will have to assess in the coming new year if it will be possible to continue working with FSRA due to the significant discrepancy. $149.61 is quite lower than $200. Please advise.
Life and Health Insurance
[2022-015] Roberto Ciarallo
Hello,
Here's my feedback on increasing the rate of life insurance license from $150 to $170 every two years.
No thank you. I'm sure FSRA can find the money elsewhere.
Health Service Providers
[2022-015] Garima
Hello
You should Consider increase fee for Healthcare services , as its not been changed since 2014 , the current fee guidelines are way cheaper than regular prices than prices as per current time.
Mortgage Brokering
[2022-015] rodney sintes - centum
I am writing to thank you for creating a standard of excellence for the mortgage industry which i am proud to be a part of .As the current market rates change and customers of our industry are faced with the traumatic reality that they may lose their life savings and the roof over their heads. leads us to the reality that the well is running dry for us as well it seems only fitting that there be a deferral or reduction on fees charged to your loyal members as we are struggling to make it in this environment. Help your members and reduce fees till we get our lives back on track thankyou

Date posted Sector Question and response
Health Service Providers

Question: Can you tell me when the professional services guidelines for health care providers will be reviewed? It is my understanding that the last review was in 2014. The industry is losing many qualified providers because the pay rates are so low and haven't been raised in 8 years. Health Care providers working in other industries (private, hospital, school, etc) get regular raises to compensate for inflation. When will the same apply to those working in the motor vehicle accident world? This is referring to the Superintendent Guideline 03/14.

FSRA response:

FSRA’s primary focus is consumer protection and regulatory efficiency. FSRA is committed to supporting the government’s objectives for auto insurance and the supervision of Health Service Providers. You can read more about FSRA’s Health Service Provider Supervision Plan on our website: Taking steps to ensure health service providers comply with the law

When FSRA is in a position to review the Professional Services Guideline, we will obtain input from stakeholders about how to best serve Ontario consumers and injured claimants.

Question: All I am asking is it LEGAL for my Insurance Company to charge me a Monthly Fee for paying my Insurance Premium in 12 equal monthly Instalments?

FSRA response:

"Not related to fee rule, so this questions will not be posted. Wendy to answer directly to the stakeholder and confirm once it's done."

Mortgage Brokering

Question: When I reviewed the broker licence fee & agent level 1 & 2 , I did not see any reference as to the cost of the new category which permits a broker to deal with private mortgages.

FSRA response:

The increase in the Broker Fee has been aligned with the proposed fee for Agent level 2, $883 Annually.

Mortgage Brokering

Question: What is the new proposed fee for mortgage agents and brokerages? The documents provided in this link do not clearly state what the new proposed fee is.

FSRA response:

Annual fee for Mortgage Agent Level 1 licence is $841, Mortgage Agent Level 2 licence is 883, and  Mortgage brokerage licence is $883. For new applicants, the annual fee is prorated and there is an addition fee of $100.

Please refer to section 6.2(3) and 6.3(5) of the Proposed Fee Rule.

Life and Health Insurance

Question: current rate is $150 for license good for two years...appears to be going up to $170...why?

FSRA response:

The cost of regulating the sector has gone up over that last few years. This includes increasing licensing costs and creation of a dedicated agent supervision team. The fee has not been adjusted since at least 1995.

Mortgage Brokering

Question: Can you please advise the basis of the incremental fee increases for the Mortgage Administrator's license for the first, second and third assessment periods after the Rule comes into effect? These are respectively, $1,344, $1,847 and $2,350. These are significant increases and I would like to understand what is driving this? Thank you.

FSRA response:

Increased fees for mortgage administrators are proposed due to FSRA increased supervisory costs stemming from these entities taking on increased duties and responsibilities.