Advocis, The Financial Advisors Association of Canada, says it would be interested in taking over certain roles from the Financial Services Commission of Ontario (FSCO) should a review of the department by a three-member panel find opportunities to transfer some of FSCO’s responsibilities to financial services groups.“In my view, there are not many existing professional associations of insurance advisors in Ontario, so certainly if that’s the intention, then our message to the panel would be that you should look at Advocis very, very closely,” says Advocis president and CEO Greg Pollock. “I think we do have the mechanisms in place to address the issues of professionalism, to ensure that advisors are current and up to date on their continuing education credits and to ensure that they are current and up to date on their errors and omissions insurance.”
Pollock’s statements follow the release of a report by Ontario Auditor General Bonnie Lysyk at the end of last year and the subsequent formation of an expert review panel in early March to look into Lysyk’s recommendations.
In the report, the auditor general castigates FSCO on two main fronts when it comes to life insurance agents in the province. Its first criticism was levelled at FSCO’s online licensing system that the auditor general says allows Ontario life insurance agents to hold licences without noting whether they have errors and omissions insurance.
“FSCO does not verify whether an agent’s errors and omissions insurance is valid, and relies on insurance providers to notify it of cancelled policies – even though it had no formal arrangements with the providers to do so,” states the auditor general’s report. “FSCO has also renewed licences of agents who were disciplined by other financial service regulators, those who declared bankruptcy, and those with criminal records, because it did not investigate their applications.”
The auditor general also said significant delays took place in handling “several serious complaints and the investigations ended in weak enforcement action. For instance, serious allegations of fraud and forgery against licensed agents took years to investigate and the agents’ licences remained active during the investigation.”
The report recommended that FSCO ensure that its online licensing system has the necessary controls to reject licences for agents who don’t meet minimum requirements.
Also of interest is the statement that FSCO should “explore opportunities to transfer more self-governing responsibilities to financial services sectors.”
“If FSCO is going to divest itself of [some] responsibilities, I think Advocis would be an ideal choice,” said Pollock. “But it remains to be seen what FSCO is going to do and this review that’s been announced is going to address that.”
Pollock said Advocis’s Raising the Professional Bar program has many of the same intents as FSCO in terms of advisors having designations and maintaining licences, errors and omissions insurance and CE credits.
If there should be some downloading of roles, it could transform Advocis into a self-regulatory organization (SRO), joining the ranks of other SROs in the financial services area, including the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC).
Pollock said the Advocis Institute for Advanced Financial Education “in its way” is already an SRO because it meets the definition of developing more professionalism and meeting certain obligations.
Pollock said Advocis is already working in conjunction with managing general agents and life insurance carriers on a technology solution known as APEXA Corp. APEXA will help link insurers, MGAs and life insurance advisors to better allow advisors to be kept up to date on renewing their licences and E&O insurance. It will also mean better screening of advisors for MGAs.
Pollock said Advocis will make a written submission to the panel and appear before it if asked to do so.
In addition to reviewing FSCO’s mandate, the review panel will also look into the current mandate of the Deposit Insurance Corporation of Ontario.