OnOct. 22, the Tribunal administratif des marchés financiers (Financial Markets Administrative Tribunal, TMF) ratified the agreement reached between the Autorité des marchés financiers and a telemarketing firm and an insurance firm working for RBC Life Insurance Company.
The TMF ordered Service à la clientèle Alorica to repay $99,450, obtained as a result of the breaches alleged in this case, to the AMF. 515963 N.B. (doingbusiness as APAC Financial Services) received an administrative penalty of $32,550.
Under the agreement, both companies pledge to comply with the law by refraining from distributing insurance products in Quebec through non-certified persons. The parties entered into the agreement on Sept. 23, 2021.
Non-certified persons
The AMF accused Alorica of acting as an insurance firm without being registered as such. Its telemarketers, who were not certified by the AMF, offered RBC Life Insurance Company group insurance products such as “Personal Accident Insurance” and “RecupaidePlus.”
The AMF gathered evidence that showed that these agents explained the products, gave details of the coverages offered, rebutted the objections of clients who said they were not interested in the products, and obtained their consent to sign up for the products before transferring the calls to an insurance representative. They were thus offering insurance products, an activity strictly reserved for insurance representatives certified by the AMF.
Advisory obligations
The AMF also chastised APAC Financial Services for failing to comply with the obligations incumbent on an insurance firm under sections 84 to 86 of the Act respecting the distribution of financial products and services (ADFPS). These sections require the firm to act with care and competence in its dealings with its clients, to ensure that its representatives and its employees act in accordance with the law and its regulations.
In addition, the firm’s representatives limited their role to following scripts prepared by the insurer, in violation of the insurance representative’s duty to advise clients, stated in under sections 27 and 28 of the ADFPS.
Over 45,000 certificates issued
Both companies are owned by the same financial group. Between January 2014 and April 2018, Alorica and APAC offered Royal Bank of Canada (RBC) customers the above products through telemarketing agents and certified representatives. Both firms followed a script prepared by the insurer.
Some 45,122 certificates of insurance were issued through the two companies during this period.
Since that time, Alorica has stopped distributing insurance products. In another case before the same tribunal, APAC agreed to comply with the ADFPS on similar facts. APAC agreed to pay an administrative penalty of $90,000 for the breaches in that case.
“The Tribunal recalls that its orders are regulatory in nature and as such are neither remedial nor punitive, although they may be deterrent. These orders are protective and preventive in nature,” reads paragraph 33 of the decision.
