Insurance And Financial Planning
The insurance representative or financial planner may compensate any person who refers them or sends them clients, even if this person is not a certified advisor or a person registered with the Autorité (firm, independent partnership, independent representative (advisor)).
However, the referral commission must not constitute commission sharing in disguise. The commission paid or received for referring clients may be considered commission sharing and therefore be subject to the commission sharing ( rules if it does not qualify as a referral commission under the rules outlined below.
To qualify as a referral commission, the amount paid to a person referring one or more clients (the referrer) must be fixed and not be contingent on the execution of a sale or vary based on the sale of a financial product or the provision of a financial service to the client. However, it may be linked to the number of clients referred.
If the referrer is an advisor, they may receive this commission directly, without going through the firm or the independent partnership for which they work, if applicable.
Without exception, as long as the client referrer follows the rules regarding protecting personal information, especially on the requirement to obtain the client’s consent before sending information they collected, the referrer can provide the advisor with information they have on the client.
It is the advisor’s responsibility to ensure they possess all the information necessary for them to proceed with the client’s needs analysis. If the information obtained during data collection is not sufficient to achieve their mandate, they must complete it themselves or have it completed by the person who originally collected the data. This collection can be done by the advisor, an uncertified person, or even via an online platform.
The advisor is required to disclose the existence of an agreement with a client referrer to the client in question. This requires that the advisor:
- discloses information about referral to the client upon their initial contact with them
- ensures that the client understands that the referrer received compensation for directing the client to them
- ensures that the client understands that other advisors and people registered with the Autorité may provide comparable products, which may meet their needs
- ensures that the client understands that the referrer and the advisor have a business relationship, if applicable
The client referrer cannot:
- help the client complete, or complete for the client, a submission request or insurance application
- pressure or encourage the client to purchase a financial product from the advisor, firm, or independent partnership they recommend