Industry representatives’ contributions to the Quebec’s Financial Services Compensation Fund are soaring. This meteoric rise is meant to replenish the Fund in the wake of the Norbourg scandal.
Mutual fund representatives are shouldering the heaviest burden; their contributions to the fund will triple, from $80 to $250 per year as of Jan. 1, 2008. Life insurance representatives will pay double the current rate, while property and casualty insurance (P&C) representatives will be contributing 25% more.
Quebec’s regulator, the Autorité des marchés financiers (AMF), unveiled these figures in the June 29 issue of its Bulletin, in which it presented the draft regulation amending the regulation respecting the dues, contributions and fees payable. "Given the risk history of each discipline and the fact that the Norbourg case is linked to the mutual fund brokerage discipline, the draft regulation stipulates that this discipline should bear nearly the entire cost of this exceptional case," the AMF notes in its Bulletin.
The AMF adds that the Fund’s deficit has grown because of recent financial scandals that caused compensation to balloon. The regulatory body then decided to increase the contribution to make up for the shortfall in assets.
For their part, P&C and life insurance representatives will contribute $160 to the fund each year. This means that the contribution of life insurance representatives will double, from $80 to $160. The AMF says that representatives of these disciplines will pay the same contribution "because both disciplines have a similar risk level."
Representatives that practise more than one discipline will still be entitled to discounts. The discounts, however, will now be set at a fixed amount of $75 per additional discipline rather than being based on a percentage.
The draft regulation is scheduled to take effect on January 1, 2008.