In its comments on the draft Provincial Capital Markets Act that is being developed as part of the Cooperative Capital Markets Regulatory System, the Canadian Association of Independent Life Brokerage Agencies (CAILBA) argues that regulators should continue to treat segregated funds as insurance products and keep them exempt them provincial securities legislation.
"We believe that the existing, specific exemption for insurance products provided in provincial securities legislation is not accidental. It serves an important purpose, given the substantially different considerations that apply to insurance policies as compared to securities," says CAILBA. "We also believe that maintaining the existing harmonized regulatory approach for such products under insurance legislation is of vital importance. The current insurance regulatory regime may be separate from that of securities regulation but it is no less stringent and no less able to protect consumers."
In its response, CAILBA points out that the sale of segregated funds, like all insurance products, has always been subject to regulation and oversight by insurance regulators, and that insurers are also monitored by the Office of the Superintendent of Financial Institutions.
"We seriously question how adding a layer of duplicative and costly securities regulation to the insurance industry’s existing, robust legal framework and regulatory regime would add materially to consumer protection," concludes the CAILBA submission.