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.

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.