These standards should address the following:
• adherence by both the distribution firm
and all its advisors to the insurer's code of
conduct (or its own if it has been reviewed
and approved by the insurer);
• advisor screening;
• on-going advisor monitoring (e.g. following
needs-based sales practices, providing
appropriate disclosures, etc.);
• reporting concerns about the suitability of an
advisor to the regulator;
• consumer complaint handling and tracking;
• adherence to all legislation and regulation
(including insurance laws and laws relating to
money laundering, privacy and safeguarding
of information, telecommunications and
anti-spam);
• adequacy of errors and omissions insurance
(especially as this may vary from statutory
minimums); and
• adequacy of planning and resources for
business continuity.
Much of this oversight occurs today through
insurer and distribution firm oversight practices.
The point of the licensing regime would be to set
minimum standards and establish accountability
among licensed entities.
3 | Roles & Responsibilities: Advisors,
Distribution Firms & Insurers
Advisors
In addition to existing responsibilities, each
advisor would be required to:
• designate a primary distribution firm;
• identify all distribution firms they place
business with; and
• sign an agreement for information sharing
between the distribution firms they place
business with.
Of course, a distribution firm identified as an
advisor's primary distribution firm would have
to agree to this designation and take on the
responsibility of a primary distributor.
Primary distribution firms
In addition to its existing oversight responsibilities
as a distribution firm, the primary distribution firm
would be responsible for carrying out prescribed
oversight functions in relation to advisors who
designate it as their primary distribution firm.
Specifically, the primary distribution firm would:
• be the first point of contact for any regulatory
concerns related to the advisor;
• be responsible for supervising the entire
business of the advisor so as to understand
all of the services being provided by the
advisor to the client;
• inform and express any concerns about
advisors to the other distribution firms those
advisors place business with;
• review an updated Advisor Screening
Questionnaire submitted by the advisor at
the time of license renewal;
• select agents and conduct the random
practice reviews, on an annual basis; and
• where concerns involve multiple distributors,
co-ordinate investigations and follow-up.
In the case of random practice reviews, the primary
distribution firm would, in addition to reviewing
its own business with the agent, coordinate to
receive the appropriate information from the
other distribution firms where the agent places
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