Strengthening protection for Ontario Life Insurance consumers
The Financial Services Regulatory Authority of Ontario (FSRA) announced today that the Minister of Finance has approved the Amended Unfair or Deceptive Acts or Practices (UDAP) Rule.
The Amended UDAP Rule will strengthen protection for life insurance customers. It does so by eliminating new sales of segregated fund contracts that charge customers for withdrawing their investments early. The charges are known as deferred sales charges (DSCs). The Amended Rule takes effect on June 1, 2023.
“Consumers deserve to have access to their own investments,” said Huston Loke, Executive Vice President, Market Conduct. “When people have to pay to withdraw their own money from segregated funds, they feel they are being cheated. We’ve now banned these charges on new sales to better protect consumers.”
As of June 1, 2023, life insurers and agents are banned from issuing and selling new individual segregated fund contracts that impose DSCs on customers.
FSRA plans to launch consultations on an updated version of another amendment to the UDAP Rule that would address concerns regarding DSCs in contracts that already exist.
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.
Individual segregated fund contracts are insurance products with investment features. These contracts provide guarantees that can protect customers if the value of their investments decreases.
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FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone.
Learn more at www.fsrao.ca.