ID
2023-004

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

Thank you for providing your feedback on FSRA’s proposed Guidance on Administrative Monetary Penalties.

The request for submissions is now closed.

We appreciate the comments and questions received. Stay up to date on Guidance releases on our newsroom. Follow us on LinkedIn and subscribe to our mailing list for quick updates.


The Financial Services Regulatory Authority of Ontario (FSRA) is now consulting on proposed Guidance designed to improve consumer protection by appropriately sanctioning persons and entities not in compliance with sector statutes, regulations and FSRA rules and requirements.

The Guidance sets out when Administrative Monetary Penalties are imposed and how the amounts are determined. This approach supports transparency, fairness and consistency.

We encourage all interested stakeholders to provide feedback by May 31st, 2023. Your feedback will help inform our final approach.

Learn more:

FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness and choice for consumers.

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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.

By submitting your content, you agree to have your materials posted on our engagement portal, used in reports and other materials prepared by Financial Services Regulatory Authority of Ontario (FSRA) that may be shared with the public. Content is moderated so that all posts are respectful and professional. The Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c.F.31, applies to all online content.

Sector Comment Date posted
Pensions
[2023-004] Glorie Alfred (OTPP) - HOOPP, Ontario Teachers' Pension Plan, CAAT Pension Plan, OP Trust
Pensions
[2023-004] Patrick Simon - Ontario Pension Board
Auto Insurance
[2023-004] Ninette Ibanez
FSRA does not have a proactive process to audit insurers on whether their business processes, specifically claim handling, institute unfair or deceptive acts or practices. FSRA relies on individual complaints and does not monitor a holistic review of insurers' business processes. Then it deprives the complainants, usually the victims of insurers' unfair or deceptive acts or practices, of an intelligible response that can be acted upon by the victim (customer).
Insurers do not follow the notice requirements in SABS to force and tie up in protracted litigation. FSRA does not have a proactive process or audit for it. FSRA cannot meaningfully show the public that insurers follow the spirit of the law.
As a consumer, I find that the focus on determining the monetary penalty is disingenuous. It only gives a false sense of thoughtfulness, but the process that will lead to the execution of the penalty is not transparent or perhaps non-existent. Therefore, multi-billion-dollar corporations, armed with their lawyers, could always circumvent the penalty, making it pointless to even spend time on it.
Life and Health Insurance
[2023-004] Brendan Wycks - CAFII
May 31, 2023

Mr. Mark White, CEO
Financial Services Regulatory Authority of Ontario
25 Sheppard Avenue West, Suite 100
Toronto, Ontario M2N 6S6
[email protected]; and
https://www.fsrao.ca/engagement-and-consultations/consultation-proposed-guidance-administrative-monetary-penalties

RE: CAFII Feedback on FSRA’s Proposed Guidance: Administrative Monetary Penalties

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 comment on your consultation document “Proposed Guidance: Administrative Monetary Penalties.”

We have divided our feedback into two sections: High Level, Thematic Feedback Comments; and Feedback On Specific Sections and Components.

High Level, Thematic Feedback Comments
As per our previous May 31, 2022 response submission to FSRA on its “Use of Retained Revenues under Regulation “Money Retained Outside the Consolidated Fund” Guidance,” it is CAFII’s view that it is appropriate for FSRA to retain revenues from administrative monetary penalties (AMPs); and that FSRA’s deployment of those retained revenues to fund research or educational initiatives which are intended to “enhance financial literacy, financial awareness, knowledge of rights and obligations or the informed decision-making of consumers…” is unquestionably in the public interest and therefore entirely appropriate. We would suggest that FSRA incorporate a reference to its intended use of retained revenues from AMPs into the Proposed Guidance: Administrative Monetary Penalties.

Our Association’s view is that, overall, the Proposed Guidance: Administrative Monetary Penalties is a principles-based, even-handed document which strikes the right balance between the exercise of regulatory authority and the exercise of case-by-case discretion while adhering to the procedural fairness and due process precepts of administrative law. We find the Guidance to be well-written and well-reasoned.

That said, given the sensitivity associated with AMPs and the high importance of getting the approach to them right, CAFII encourages FSRA to consider the significance to a regulator of incentivizing the right behaviours among regulated entities, rather than focusing predominantly upon having the power to impose an AMP as a punitive sanction. We believe that it would be appropriate to include in the Proposed Guidance additional references to FSRA’s exercise of discretion and its use of warnings, rather than AMPs, as a first option when a situation arises in which a regulated entity has failed to comply with regulatory expectations and is a first-time offender.

In particular, if a first-time offender’s contravention is recognized to have been unintentional, CAFII believes that a letter of warning or other similar measure should be FSRA’s initial course of action. We acknowledge that there are references in the Proposed Guidance to the weighing of mitigating circumstances when assessing the evidence and deciding upon an appropriate course of action, but we believe that such considerations should be given greater weight in the Proposed Guidance.

In that same vein of wanting to incentivize the right behaviours, CAFII is strongly of the view that a breach which a regulated entity has proactively self-reported to FSRA -- and for which it has taken prompt, self-initiated corrective action, and made restitution to any harmed consumers to make them whole – should be regarded and treated differently by FSRA as compared to a breach which the regulator has identified itself, in terms of determining the appropriate course of remedial action.

In that connection, we would like to reiterate some salient input from our September 24, 2021 response submission on the Authority’s Proposed Approach Guidance Around Publishing Information Arising From Enforcement Proceedings and Investigations – input which is also quite relevant to the current AMPs-related consultation -- as follows:

In principle, CAFII supports FSRA’s intention to be transparent and publish information about the actions it has taken in response to an industry player’s misbehaviour or lack of compliance with legislation and/or Regulations. We generally concur that transparency in enforcement actions increases public awareness of misconduct and of the sanctions taken to improve consumer protection and deter future misconduct in the regulated sectors; and that a consistent and clear approach to transparency of enforcement also helps to ensure that non-compliant regulated entities and individuals are treated equitably and know in advance when and how FSRA will inform the public that it is taking action for non- compliant activity.

However, we are making this submission to draw out one particular concern. CAFII is concerned that implementation of FSRA’s Proposed Approach Guidance, as currently worded, may lead to the publication of information arising from an enforcement proceeding or action taken against an industry player even when that business has proactively self-reported an issue to FSRA, taken prompt corrective action, and made restitution to any harmed customers to make them whole.

CAFII members are strongly of the view that when it comes to industry players with a strong track record of regulatory compliance, a policy of publishing information arising from enforcement proceedings and investigations should not penalize nor create a disincentive for such companies to come forward proactively, self-report, and correct the situation when they discover a lapse in regulatory compliance.

When such a lapse does occur and is discovered internally, CAFII members give careful and due consideration to self-reporting the matter to the relevant regulatory authority. Furthermore, such an incident is promptly self-corrected, with a focus on rectifying the situation for any affected customers.

In CAFII’s view, to have a ‘naming and shaming’ publication result from responsible and proactive self- reporting of a regulatory compliance lapse seems inconsistent with the overarching intent of FSRA’s Proposed Approach Guidance.

We therefore urge FSRA to give careful consideration to the scenario described above; to possible unintended consequences that might arise from “letter of the law” implementation of the Proposed Approach Guidance; and to the wisdom of giving itself flexibility and room for judgment to take into account case-by-case circumstances in applying the final Approach Guidance.

CAFII’s thinking articulated in our September 24/21 submission above applies equally to the current consultation: we believe that a possible leaning towards the imposition of an AMP in most cases, largely because the power to do so exists, should be guarded against; and that an AMP should not be a part of the first course of remedial action in cases where the regulated entity is a first-time offender and the contravention has been relatively minor, nor in cases where the regulated entity has proactively self-reported the issue to FSRA, taken prompt corrective action, and made restitution to any harmed customers to make them whole.

We believe that there are legal grounds and precedent for FSRA to take the approach we are advocating with respect to situations where a regulated entity has self-reported an issue to the Authority and taken prompt corrective action. For example, there is the safe harbour provision found in Canada’s Anti-Spam Legislation (CASL). Pursuant to section 48(1) of CASL, the court is prohibited from considering an application against a person for statutory damages under paragraph 51(1)(b) of CASL if the person has entered into an undertaking with the CRTC or been served with a notice of violation by the CRTC regarding the same conduct. A similar exemption applies for those persons liable under the extended liability (section 52) and vicarious liability (section 53) provisions in CASL, in cases where the corporation, employee, agent or mandatary, as the case may be, who committed the contravention has entered into an undertaking or been served with a notice of violation.

Feedback On Specific Sections and Components
In CAFII’s view, there is a discernible inconsistency in the language used in two separate, but parallel sections of the Proposed Guidance. To be specific, in section A2, #7, the statement is made that in determining whether an AMP should be imposed, FSRA may, among other things, consider “FSRA’s statutory mandate, priorities and strategic enforcement objectives” comes across as very broad and sweeping. And, in addition, the reference to “strategic enforcement objectives” in that sentence gives the reader an impression that FSRA could decide to pursue variable, AMP-driven ‘clamp-down campaigns’ over time. In contrast, we regard the parallel language used in Section B1 to be more precise and preferable, namely that “The Sector Statutes restrict FSRA to the Statutory Criteria and do not permit consideration of additional or alternative factors.”

In a similar vein, in the “Rationale and background” section related to transparency, CAFII is confused as to why the perspectives of consumers and other stakeholders would be a consideration in determining whether or not to impose an AMP. The mention of consumers and other stakeholders in this context gives the reader the impression that FSRA would like to introduce public opinion into a decision that should be made solely in accordance with strict principles, in line with FSRA’s statutory obligations.
In the Section in B1 that reads “Non-monetary harm cannot be quantified, but can be considered on a spectrum of severity,” CAFII recommends that FSRA include some additional commentary with respect to what types of tools or resources the Authority would consider using to assess non-monetary harm on that spectrum of severity, given that it cannot be readily quantified.

With respect to the section on “FSRA ensures that general AMPs are not punitive,” we recommend the inclusion of additional language to clarify how FSRA will tackle its “ensuring” work in this area, including the role of the Financial Services Tribunal in these matters, and the appeal process available to a regulated entity which regards an AMP which FSRA has imposed upon it to be punitive.

CAFII notes that in the section titled “Determining the amount of a general AMP,” a principle is set out that “A General AMP seeks to neutralize all economic benefits of a contravention, to the extent permitted within the statutory maximum.” In CAFII’s view, that section would be improved through alternate language that conveys more even-handedness, by avoiding use of the word “all” and instead using words such as “. . . neutralize those economic benefits derived from the contravention.”

Conclusion
CAFII again thanks FSRA for the opportunity to provide key industry stakeholder feedback on the Authority’s “Proposed Guidance: Administrative Monetary Penalties.” 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 that 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; Canadian Tire Bank; Chubb Life Insurance Company of Canada; CUMIS Services Inc./The Co-operators; Manulife (The Manufacturers Life Insurance Company); Securian Canada; The Canada Life Assurance Company; and Valeyo.
Cross Sector
[2023-004] Giuseppina A. Marra - Desjardins Group
Hello,
Please find attached Desjardins Group's comments regarding the FSRA public consultation on proposed Guidance: Administrative Monetary Penalties.
We'd like to thank you once again for the given opportunity.

Best regards,
Regulatory Affairs
Desjardins Group
Life and Health Insurance
[2023-004] Susan Allemang - Independent Financial Brokers of Canada
Please see the attached response from Independent Financial Brokers of Canada (IFB).
Life and Health Insurance
[2023-004] David Grad - Primerica Financial Services (Canada) Ltd.
Life and Health Insurance
[2023-004] Margaret Campbell - CLHIA
Please find attached the submission of the Canadian Life and Health Insurance Association to the consultation on the draft Guidance on Administrative Monetary Penalties. Please do not hesitate to reach out with any follow up questions.
Auto Insurance
[2023-004] Rhona DesRoches - FAIR Association of Victims for Accident Insurance Reform
FAIR Association of Victims for Accident Insurance Reform
579A Lakeshore Rd. E., Box 39522
Mississauga, ON, L5G 4S6

May 31, 2023
By email to FSRA feedback comment box
FAIR submission to: Consultation on proposed guidance: Administrative Monetary Penalties ID 2023-004

FAIR is a grassroots not-for-profit organization of MVA (Motor Vehicle Accident) victims who have been injured in motor vehicle collisions and their supporters. We speak from the perspective of those who have struggled with the current auto insurance system in Ontario.

Our comments are directed toward auto insurance only.

We find the current Administrative Monetary Penalties AMP out of touch with the reality of the harm caused by auto insurers and their associates who behave badly in the course of a claim. A car crash injury is, in and of itself, a life-changing event if someone is seriously injured. Claimants should not ever be subjected to punishment for making a claim by the very business they paid to protect them in a time of need.

The current Administrative Monetary Penalty associated with auto insurers is at such a low and ineffective amount it cannot be said to contribute to FSRA’s mandate of “protecting the rights and interests of consumers, promoting high standards of business conduct, and contributing to public confidence”.

Under section 1, the degree to which the contravention or failure was intentional, reckless, or negligent should have special significance to how the Regulator views the complaints of auto insurance claimants who are vulnerable Ontario patients and for whom insurer behavior can have life-long consequences. Insurers who behave badly and who fail to properly address injuries are often compounding problems when they create obstacles to access to rehabilitation benefits and since many treatments and rehabilitation are time-sensitive, this is a cruel and painful experience that can potentially see some catastrophically injured people punished both physically and financially for the remainder of their lives.

As FSRA takes into consideration the degree and extent of the harm caused by a contravention or failure to comply with legislation so too should the fact that very few people will make a complaint to the Regulator during a claim process so each complaint is likely a tip of an iceberg of bad behavior that should be calculated. Insurers who are deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with statutory requirements should not be offered safe harbor in any circumstances by the Regulator. In order to promote confidence by the Regulator, any AMP must be meaningful and not a small slap on the wrist such as currently exists with a maximum of a mere $200,000.00 penalty for an insurer who makes billions of dollars selling what is a false promise of care when you need it.

Why should Mortgage Brokers, Credit Unions and Caisses Populaires be subjected to a much higher AMP than insurers whose potential harm to consumers is all that much greater? This is not to say those entities’ AMPS are too high but it does beg the question – why are insurer AMPs so low as to be insignificant?

Respectfully, FSRA Administrative Monetary Penalties should be exactly that, a penalty and not glossed over with an eye toward protecting insurer profits with “amount determination is to ensure that the AMP is not punitive in nature”. You cannot have insurer compliance failures followed by an AMP and say that it isn’t punitive in nature.

Since it appears the level of the AMPs is set by Ontario legislators we would hope that the Regulator would pursue an increase through the Minister of Finance office. To properly reflect the gravity of non-compliance when citizens’ health is undermined and the significant potential harm, physically, mentally and financially, is caused by unacceptable insurer behavior, we suggest the AMP increase should be significantly more than the other sectors overseen by FSRA.

We would take this opportunity to point out that if FSRA is to reach a high level of consumer confidence it is going to be through transparency and the current policy of not publishing complaints about auto insurers is undermining that effort. The lack of transparency is an obstacle to treating consumers fairly and it stands in the way of the ability to make fully informed decisions about what insurers are up to and who to best purchase from, or in other words, provide the ability to choose good coverage from a reputable insurance company.

Thank you for the opportunity to have our voice heard.

FAIR Association of Victims for Accident Insurance Reform
‘supporting auto accident victims through advocacy and education’
Credit Unions and Caisses Populaires
[2023-004] Brent Furtney - Canadian Credit Union Association
Greetings,

On behalf of the credit union sector in Ontario please find attached the Canadian Credit Union's Association's response on consultation ID: 2023-004.. If CCUA can support our commentary further please do not hesitate to reach out to myself for response and support.

Kind Thanks.
Brent Furtney

Regional Director Ontario Government Relations
CCUA
Property and Casualty and General Insurance
[2023-004] Kim Donaldson - Insurance Bureau of Canada
Attached is IBC's submission on the AMP consultation.
Thank you,

Kim Donaldson
Vice President, Ontario
Auto Insurance
[2023-004] Tracy Montague - Citizen
Any ruling or sanctions against a healthcare practitioner that uses HCAI, should take in consideration that HCAI has a very large flaw in it's design. The government mandated, IBC owned system does not give the individual heath care practitioners the view of what is being submitted in their name. They are not required to authorize the submissions, therefore there is a lot of fraud being sent through the system, without any oversight from FSRA lets it continue.
FSRA has known this since 2017, and they have known how to fix it since 2019. However FSRA has not fixed it, but this does give all healthcare practitioners a feasible defense against any wrong doing in this system. Knowing this, no penalties of any type should be considered against an individual healthcare practitioner using this system. That is until FSRA finally fixes it.
Sector Question and response
Auto Insurance

Question: How would the penalty achieve your objective when FSRA would not even give a yes or no answer to a complaint/question about an insurer's unfair or deceptive acts or practices? Why can't you work on the process of transparency first before dwelling on the penalty amount?

FSRA response: