On September 30, 2015, the Chambre de la sécurité financière (CSF) tabled a brief in response to the Report on the Application of the Act respecting the distribution of financial products and services. In its brief, the CSF loudly reaffirmed its position: no compromises can be made when it comes to protecting investors. Moreover, the CSF clearly demonstrates that it is in Quebec’s favour to safeguard its assets when it comes to overseeing financial products and services.
The report raises several questions about the efficiency of the current oversight system. The magnitude of the changes that have been anticipated has created a climate of uncertainty that is highly damaging to the entire industry and to investors. The CSF thus reiterates the importance of a transparent and prudent approach. Indeed, it urges the Minister of Finance to hold public consultations before employing any recommendation that would have a negative impact, especially when it comes to protecting consumers.
The CSF: a multidisciplinary SRO at the forefront of the industry
In its 15 years, the CSF has continuously evolved and is now a model of efficiency and self-regulation, making it the envy of several stakeholders across Canada. In the rest of the country, numerous organizations are charged with overseeing professionals, whereas Quebec has advantageously opted for a multidisciplinary system that ensures an efficient oversight of distribution practices. Although there is still room for improvement, this system has made Quebec a leader in the industry in Canada.
The solution: increase the CSF’s role
“It is only by letting the Chambre play a greater role in terms of oversight that it will be possible to reconcile protecting the public with promoting efficiency in our sector without doing away with the system’s most efficient components,” said Marie Elaine Farley, President and Chief Executive Officer of the Chambre de la sécurité financière. “We must preserve the influence Quebec has in the group savings sector by relying on the CSF, an organization that is already entrusted with this role, rather than delegate this responsibility to the Mutual Fund Dealers Association of Canada (MFDA), an organization that is not even recognized in Quebec.
This solution would meet the challenges of harmonization while preserving the innovation of the CSF model, an organization with significant field presence thanks to its multidisciplinary oversight, contrary to the MFDA.
Advisors: an essential role
The CSF insists on the fact that it is essential to recognize the value of an advisor along with every advantage that comes with consulting a competent professional who is overseen by an independent organization. Representatives have a social role to play: they are the guardians of the financial heritage of thousands of individuals.
The ADFPS has made members of the CSF into true professionals by requiring them to undergo mandatory continuous education. Members are now also responsible for their actions and must comply with a strict code of ethics. The CSF provides a counterbalance to commercial interests and ensures the efficiency of the financial sector while protecting the public, a benefit for the entire population. We are therefore surprised that the Report favours a deprofessionalization approach that trusts the insurers themselves with the responsibility of making their employees respect a code of ethics.
Modernizing without compromising the protection of the public
The CSF views technological progress in a positive light and is in favour of developing the industry and enhancing accessibility to new products. However, this must not be done in a way that compromises the protection of the public.
Products related to insurance of persons, be they simple or complex, require explanations along with a needs analysis and advice tailored to the consumer’s specific situation. The consumer must be able to benefit from the same protections, advice, and services, no matter what method of communication he or she chooses.
The CSF therefore believes that an online offer must be adjusted in line with the principles and objectives of the ADFPS, not the other way around. We must privilege a hybrid transaction model that is based on both the availability of information online and on the involvement of a certified and responsible representative.
“Depending on if the product purchased is related to insurance or group savings, the consumer would be subject to inconsistent levels of protection, sometimes overseen by the insurance company and at other times by the professional representative. This is an unacceptable situation to us. We are confident that public consultations will allow the Minister to come to a decision that is in the best interest of Quebeckers,” said Ms. Farley.
About the Chambre de la sécurité financière
The Chambre de la sécurité financière is a self-regulatory organization whose mission is to protect consumers by maintaining discipline and overseeing the training and ethics of its nearly 32,000 members. Its members practice in five sectors and registration categories: group savings plan brokerage, financial planning, insurance of persons, group insurance of persons, and scholarship plan brokerage.
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