CLHIA-ACCAP

3 A: CUSTOMERS CAN EXPECT KNOWLEDGEABLE AND ETHICAL ADVISORS International standards are that advisors be licensed, knowledgeable about the products they sell, subject to a code of ethical standards, and subject to ongoing review -- by the regulator, insurer, distributor and/or a Self-Regulatory Organization (SRO). Canada has a licensing regime in all provinces, overseen by a Superintendent of Insurance in some provinces, and by an Insurance Council in other provinces (the Western provinces, as well as Quebec). CCIR has principles that the advisor must place the interests of policyholders and prospective purchasers ahead of his or her own interest. Advisor associations, insurers and, in some cases, provinces, have codes of conduct for advisors. And insurers have a regulatory obligation to screen advisors for suitability, monitor advisors and report unsuitable advisors. In looking at this area, it is important to consider not just whether the right criteria have been established, but whether there is effective oversight of advisors, to ensure that they are meeting regulatory obligations and have appropriate policies and procedures in place. Licensing standards We commend the efforts of provincial regulators to harmonize pre-license proficiency standards through enhancements to the entry-level Life Licence Qualification Program which took effect January 2016. Additional post-licensing criteria are set by some, but not all jurisdictions. We believe that there are opportunities to further harmonize post-licensing requirements, as follows: Recommendation 1: We recommend that all jurisdictions establish continuing education criteria for life licensees Recommendation 2: We recommend that all jurisdictions require errors and omissions insurance for life licensees Regulatory oversight Regulators investigate advisors when complaints are filed and, in some jurisdictions, also conduct spot audits. Resourcing challenges and a wide array of competing regulatory demands can and do affect the capacity of regulators to take on a more proactive approach. It is our view that the Council model generally works very well and is more likely to contribute to a dedicated proactive approach. Councils operate with authority delegated from the Superintendent or from the government. Their mandate is to provide regulatory structure and oversight for those who distribute insurance. They have dedicated resources. They benefit from industry expertise, in that insurer, advisor and public representatives sit on each Council. (It is important to note that the role of Council representatives is never one of advocacy; rather, they are tasked with acting in the public interest, and lending their industry expertise to that task.) We believe that regulatory oversight could be further strengthened and harmonized by adopting a Council model across the country. In taking such an approach, it is important to avoid duplication and inefficiencies with existing regulatory structures. A coordinated provincial system, rather than a national SRO, recognizes that licensing is a provincial responsibility and ensures a closer link with advisors and customers. National coordination should continue to be provided through CISRO. (While a provincial

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