Life insurance produt suitability: Ontario regulator launches mandatory survey

The Financial Services Commission of Ontario (FSCO) wants to learn more about the process life insurance agents use to make suitable product recommendations at point of sale. To help achieve this goal, on Oct. 15 the regulator launched a mandatory online questionnaire for selected agents.
In a notice on its website, FSCO explains that agents selected at random, or as part of a targeted sample, must complete the survey by Nov. 14. “Failure to respond could result in regulatory action,” warns the regulator.

In addition, FSCO compliance officers will carry out follow up visits with a random sample of agents to check the reliability of the information provided in their questionnaires. Agents selected for these follow up visits will notified by Nov. 30.

Anatol Monid, director of Market Conduct at FSCO says that in addition to conducting a review to better understand and assess the process that life insurance agents use at the point of sale in making suitable product recommendations, “the review will also consider the actions that life insurance agents are taking to support the financial literacy of their clients. FSCO is undertaking a similar review in the mortgage broking sector.”

The questionnaire was developed based on information received during an industry consultation held this summer related to best practices for determining product suitability.

Why did FSCO decide to make the survey mandatory for selected agents? Monid explains that “This is primarily an information gathering exercise for FSCO. As we opted for a random sample approach for surveying agents, it is important that we obtain a credible response level for a complete analysis. After our review, we will have a better understanding of the best practices in the market and will share our findings.”