ID
2022-013

Type
Rules
Sector
Life and Health Insurance
Status
Public comment closed
Date
Comment Due Date

Thank you for providing your feedback on FSRA’s proposed amendments to the UDAP rule.

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

The request for submissions is now closed.


The Financial Services Regulatory Authority of Ontario (FSRA) is taking steps to better protect customers by proposing to eliminate deferred sales charges (DSC) on new segregated fund contracts, and restricting their use on existing ones. DSCs are sales charges that customers pay if they withdraw their own money from a segregated fund contract before the end of a time period specified in the contract.

FSRA is proposing two separate amendments to the Unfair or Deceptive Acts or Practices (UDAP) Rule. If approved, the proposed amendments would ban sales of new individual segregated fund contracts with DSCs effective June 1, 2023. This would bring the regulation of segregated funds in Ontario in line with securities regulators across Canada, who ended DSCs for mutual funds effective June 2022, and the expectations of insurance regulators across the country.

The proposed UDAP rule amendments would:

  • prohibit insurers from issuing new individual segregated fund contracts that use DSCs on or after June 1, 2023
  • introduce customer protections that address the use of DSCs for all individual segregated fund contracts, regardless of when the customer purchased them, including customer disclosure and limits on the use of existing DSC options

FSRA is now seeking feedback on its two proposed rule amendments. The consultation will close on February 23, 2023. You can provide your feedback on both amendments together if you prefer.

The first amendment would prohibit DSCs on contracts issued on or after June 1, 2023, and prevent insurers from adding DSCs to contracts after that date or making DSCs less favourable for customers:

The second amendment would protect customers who have DSCs on individual segregated fund contracts that were issued before June 1, 2023 by limiting their use and requiring new disclosure:

For your convenience, we attach a copy of the existing UDAP rule with changes identified to show the effects of these two amendments together:

We also attach a flow chart that explains how the proposed amendments would affect contracts that exist before they take effect:

As required under the FSRA Act, here are the formal notices of the proposed rule amendments:

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Before we begin, please make sure you do not include any personal or private financial information. If your inquiry does require this information be shared with us, please call us at 1-800-668-0128 or email us at [email protected] for instructions.

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Sector Comment Date posted Sort descending
Financial Planners and Advisors
[2022-013] David McGruer - Investia Financial Services Inc.
Rather than a direct commentary of the proposals I offer the attached essay that was written in response to a media article on the proposals. I believe it thoroughly addresses the harms the proposals will do if implemented and offers a perspective unlikely to be well expressed in other comments.
[2022-013] Consumer Advisory Panel to The Financial Services Regulatory Authority 0f Ontario (FSRA)
The Consumer Advisory Panel had the opportunity to participate in this consultation. The Panels official submission provided in the attached document.
[2022-013] Kirshita Seevaratnam - FAIR Canada

Life and Health Insurance
[2022-013] Michael Scott - Advocis
To Whom It May Concern:

Please find enclosed the Advocis response to the proposed UDAP Rule Amendments.

Thank you for your consideration of these amendments.

Best Regards,
Michael Scott
Associate Director, Legal and Regulatory
Advocis
Life and Health Insurance
[2022-013] Jane Stoddart - Investia Financial Services Inc.
Rather than a direct commentary of the proposals I offer the attached essay that was written in response to a media article on the proposals. I believe it thoroughly addresses the harms the proposals will do if implemented and offers a perspective unlikely to be well expressed in other comments.
Life and Health Insurance
[2022-013] Lyne Duhaime - Canadian Life and Health Insurance Association
Full text in PDF (attached)
Life and Health Insurance
[2022-013] Kerrie Moore - Cooperators / CUMIS

Life and Health Insurance
[2022-013] NA - The Canadian Advocacy Council of CFA Societies Canada
Full text in PDF (attached)
[2022-013] Michael Thom (on behalf of the Canadian Advocacy Council) - CFA Societies Canada
See attached
No questions have been asked about this consultation yet.