FSCO to conduct review of Ontario licensed advisors

July 20, 2015

The Financial Services Commission of Ontario (FSCO) will conduct in-depth reviews of life insurance advisors to ensure advisors are meeting their licensing requirements under the Ontario Insurance Act. These requirements include maintaining valid errors and omission (E&O) insurance to cover client financial losses from advisor negligence or fraud, and completing continuing education credits for their profession.

Beginning in June 2015, FSCO will undertake approximately 200 compliance examinations over the course of a year. Some advisors will be specifically selected to participate, while others will be selected at random.

This FSCO action has been prompted by the Ontario Auditor General's December 2014 report that recommended changes to FSCO’s oversight of life insurance advisors. The Auditor General found weaknesses in FSCO’s online licensing system, with missing or incomplete data for almost a quarter of active advisors as to whether they held valid E&O insurance.

While FSCO has periodically conducted their own audits asking advisors to provide proof of E&O coverage (with an over 95% compliance rate), they had no system in place to monitor E&O coverage on an ongoing basis. FSCO will be implementing such a system this summer that will notify advisors when their information is not current or when their E&O policies are expiring.

FSCO staff will contact the selected advisors to arrange a date and time for the review, which should take a full day to complete.

The review will also assess advisors’ disclosure documents to ensure they are adhering to point-of-sale statutory disclosure requirements and industry best practices, such as completing needs assessments during the insurance sales process and declaring conflicts of interest.

Advisors will receive a report of the review findings and recommendations within 30 days after the audit. Advisors may be required to respond to the recommendations within a specific period of time.

Please contact your Sun Life Financial Group Retirement Services representative.