CLHIA-ACCAP

7 universal participation of advisors, insurers and MGAs in an industry-wide solution is necessary. To achieve this goal, it may be necessary for such a system to offer different levels of service so that it optimizes the value for insurers with differing business models. 3 | Practice Reviews The current best practice for insures to conduct on-site advisor practice reviews should become an industry standard. Such reviews should be used to confirm that advisors are complying with requirements related to disclosure, continuing education and errors and omissions insurance. Reviews can also be used to confirm that advisors are documenting their fact finding, needs assessments and recommendations as required for needs-based selling. It should be noted that under the current regulatory structure, reviews are restricted to the business that an advisor places with the insurer conducting the review. 4 | Identified Risks Beyond the trending and red-flagging activities currently conducted by insurers, the industry should – through CLHIA – monitor the distribution environment to identify new risks and advise members of ways to manage these in their oversight practices. Two recent examples of potential risks that have been identified and discussed within the industry are deferred sales charge purchases for clients over a certain age and eligibility for discounted high net worth fees. 5 | Record of Disciplinary Decisions A record of insurer disciplinary decisions about advisors should be maintained in a clearinghouse, with due consideration to privacy and other issues, that can be accessed by insurers. Such a system would enable insurers to: • identify advisors who fail to declare, through the Advisor Screening Questionnaire, problems they have had with previous insurers; • identify all of the past and current insurers that an advisor has contracted with; and • notify other insurers about an advisor with whom they have a contract. It should be noted that to establish such a system, existing contracts with advisors would need to be amended to provide for the advisor to consent to having this information recorded. Conclusion The life and health insurance industry believes that the initiatives above will improve advisor oversight within our existing regulatory structure. In addition, we believe that distribution firms should be incorporated into a regulatory licensing and oversight regime, and will work with regulators and the advisor community to pursue this change. Such a regime would recognize our shared interest in ensuring fair outcomes for consumers who, now more than ever, look to our industry to help ensure that their financial futures are secure.

• Cover