Unfair or Deceptive Act or Practices Rule | Financial Services Regulatory Authority of Ontario

Sector: Life & Health Insurance, P&C Insurance, Auto Insurance

Current UDAP Rule: Amended UDAP Rule

The Unfair or Deceptive Acts or Practices (UDAP) Rule took effect on April 1, 2022 and was amended effective June 1, 2023. The rule strengthens the supervision of insurance industry conduct and enhances consumer protection by clearly defining outcomes that are unfair or otherwise harmful to consumers.

FSRA is continuing its work to strengthen protection for insurance consumers in Ontario.

Current consultation

As a result of feedback received from the public consultation, FSRA is proposing changes to the second proposed UDAP amendment. The second consultation began on June 1, 2023 and comments are due by June 30, 2023. Please see the consultation page for details.

Summary of proposed changes

As described in the first public consultation, the second amendment to the UDAP Rule would require insurers to remove deferred sales charges as an option from existing contracts if their contracts allow that change. It would require insurers to give customers new information to help them make better choices about sales charge options and their investments in individual segregated fund contracts.

As compared to the previous version consulted on, the proposed changes, if approved, would:

clarify that the second UDAP amendment would not have retroactive effect, and
simplify the information a customer would receive if their insurer uses its pre-existing contractual right to switch the customer from a DSC to a sales charge option that is in all ways more favourable to the customer. In this situation, such disclosure may occur later, since early disclosure is not required for the switch. The same approach would not be available for an insurer switching a customer to a sales charge option that is not in all ways more favourable to the customer, such as the advisor chargeback option.

Please note the Canadian Council of Insurance Regulators and Canadian Insurance Services Regulatory Organizations released an announcement on May 15, 2023 about using sales charge options, other than deferred sales charges, which pay upfront commission.

CCIR CISRO Position on Upfront Compensation in Segregated Funds

History of the UDAP rule

The following is a timeline of the UDAP rule process, and the related documents published as per legislative requirements under the FSRA Act.

June 1, 2023 – FSRA releases proposed Amendment 2 to the UDAP Rule for second public consultation

On June 1, 2023, FSRA proposed revisions to a second proposed amendment to the Unfair or Deceptive Acts or Practices (UDAP) Rule. This amendment will, if approved, protect Ontario consumers from issues related to deferred sales charges on individual segregated fund contracts that already exist.

June 1, 2023 – Amendment 1 to the UDAP Rule takes effect

May 17, 2023 – Minister approves Amendment 1 to the UDAP Rule

April 18, 2023 – FSRA submits proposed Amendment 1 to the UDAP Rule to the Minister of Finance for approval

On April 18, 2023, FSRA submitted the first proposed amendment to the Unfair or Deceptive Acts or Practices (UDAP) Rule to the Minister of Finance for approval.

Board-approved Amendment 1
Board-approved Amendment 1 blacklined vs draft previously consulted on
Proposed Consolidated Rule, blacklined with pending changes per Amendment 1
Publication about Amendment 1
Summary of stakeholder feedback received during the public consultation regarding Amendment 1 and FSRA’s responses

November 25, 2022 – FSRA releases two separate proposed amendments to the UDAP Rule for public consultation

On November 25, 2022, FSRA proposed two separate amendments to the Unfair or Deceptive Acts or Practices (UDAP) Rule. These amendments will, if approved, protect Ontario consumers from issues related to deferred sales charges on individual segregated fund contracts.

April 1, 2022 - UDAP Rule is effective

February 1, 2022 - FSRA re-submits its UDAP Rule to the Minister for approval

On February 1, 2022, FSRA re-submitted the UDAP Rule to the Minister of Finance as a minor technical amendment was made to the Rule (altering the Rule’s coming into force provision).

Amendment to Rule:

Amending s. 11(1) in order to specify the exact section of Schedule 5 of the Plan for Care and Opportunity Act (Budget Measures), 2021 which must be proclaimed in force for the Board Approved Rule to become an in force FSRA rule.
Publication of Board Approved Rule – February 1, 2022
Revised Rule

December 20, 2021 - FSRA submits its UDAP Rule to the Minister for approval

On December 20, 2021, FSRA submitted its UDAP rule to the Minister of Finance for final approval. The rule will replace the UDAP Regulation under the Insurance Act and will take effect once consequential amendments made by the government are proclaimed into force.

July 14, 2021 - FSRA releases its revised Proposed Unfair or Deceptive Acts or Practices Rule for public consultation

On July 14, 2021, FSRA released a revised version of the UDAP rule for consultation (revisions were made in response to feedback received during the first consultation period – see below)

December 18, 2020 - FSRA’s First Proposed Insurance Rule Released for Public Consultation – the Unfair or Deceptive Acts or Practices (UDAP) Rule

On December 18, 2020, FSRA released the first proposed UDAP rule for consultation.