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ICoBC hands out multiple fines for compliance failures

By The IJ Staff | October 18 2019 02:35PM

Two firms and their nominee are ordered to pay more than $46,000 in fines and costs, following an investigation by the Insurance Council of British Columbia (ICoBC) that found all three failed to conduct sufficient due diligence into whether or not their product and process was compliant in British Columbia.

According to the order, the ICoBC’s decision to impose sanctions arises from allegations that James McGregor, the nominee, Haig & Associates Inc. and On Track Insurance Services Ltd, distributed Guaranteed Asset Protection (GAP) vehicle insurance to British Columbia consumers, through motor vehicle dealerships that were not permitted by council to engage in GAP business.

Before expanding their GAP business in British Columbia, the group contacted the GAP insurer to ensure that their offering was in compliance with BC’s regulatory requirements. The assurances they relied on came from an underwriting and governance manager, not directly from the company’s legal or compliance departments.

Relied upon the advice of a third party

Given the licensee’s experience in the insurance industry, when they decided to do business in British Columbia, they ought to have taken further steps to ensure that they were within this jurisdiction’s regulatory requirements,” say the order’s authors. “In terms of their compliance, the licensees relied upon the advice of a third party who was not a lawyer, and they did not seek advice from council itself.”

Of particular interest, the dealerships selling the policies were reportedly given the discretion to add their own dealer marketing fee, up to $2,000 per policy, and did so without advising customers that there was a dealer marketing fee, contrary to rules which state that clients must be given an itemized list of fees charged by the dealership, including the amount of each fee and a description. (Dealer marketing fees collected in this case generally made up 50-80 per cent of the total premium charge to the consumer.) During the course of the investigation, although the licensees were noted to be credible and forthright witnesses, the firms were not able to produce any examples of the documentation used to sell the GAP policies in BC.

For their “significant complacency” in ignoring the regulator’s rules and code of conduct, and for “relying on a third party in the manner that it did,” the order states that “fines should be high enough to achieve general deterrence and promote public confidence in the profession.” To that end, the council levied fines of $15,000 to both On Track and Haig. It also fined McGregor $7,500, and made all three responsible for council’s investigative costs of $1,500 and hearing costs of $7,631.85.

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