In its submission to the Financial Services Commission of Ontario (FSCO), consumer advocacy group FAIR Canada says the province's insurance laws and regulations need an overhaul, not just fine-tuning.
Last week, FAIR Canada provided FSCO with its comments on the regulator's draft statement of priorities for 2016. The first priority on FSCO's list is to ensure that the financial services industry complies with Ontario's laws and regulations, but FAIR says that these laws and regulations need to be changed significantly in order to adequately protect consumers.
Difficult to ensure compliance
"FAIR Canada is strongly of the view that the existing insurance laws and regulations are drafted in way that makes it difficult for FSCO to ensure the entities and intermediaries it regulates are in compliance," reads the submission. "An overhaul of these laws and regulations is needed in order to adequately protect consumers. Self-regulation through industry guidance has proved to be inadequate and insufficient."
While life insurers have a legal duty to ensure that their agents comply with applicable regulations, the submission says that in practice life insurers are "unable to fulfill their duty with any rigour because many life insurance agents no longer work directly for an insurer". FAIR also believes that the current product suitability process is "inadequate" and has "serious flaws".
Robust consultation needed
What’s more, FAIR argues that any future reforms should not simply be the result of discussions between regulators and industry groups such as the Canadian Life and Health Insurance Association, but should rather involve "robust consultation with and input from consumers and consumer groups".
This is just one area of concern expressed in FAIR Canada's submission to FSCO. The complete document can be found on its web site.