The Autorité des marchés financiers (AMF) launched two regulatory consultations on December 8, 2022. One concerns representatives’ professional liability insurance and outside activities. The second deals with an amended version of the Regulation respecting complaint processing and dispute resolution in the financial sector. Both consultations end on February 6, 2023. 

The regulator says the goals of both consultations are twofold: To enhance consumer protection while optimizing the compliance burden.

Relaxing controls 

The AMF is proposing regulatory changes to advisor liability insurance to better protect consumers and representatives. It says it wants to correct the insurance coverage issues it has observed over the years.

The consultation also seeks to ease some of the AMF’s controls related to the monitoring and compliance of professional liability insurance policies. 

The regulator is proposing changes in five areas: 

  • The exception for the category of claims adjuster employed by an insurer; 
  • The addition of a clause regarding compliance with regulations under the Distribution Act;
  • Proof of maintenance of professional liability insurance at policy renewal; 
  • Coverage for gross fault; 
  • The extension of the coverage period for a five-year term. 

The AMF also wishes to survey the industry on the appropriateness of adding cyber risk coverage to registrants’ liability insurance, in the current regulations.

Reducing labour shortages 

Within the same consultation, the AMF has proposed regulatory amendments to update the framework for the outside activities of representatives governed by the Distribution Act. The amendments are meant to be harmonized with the new obligations in effect since June 6, 2022 in the securities and derivatives sectors. The proposed changes are also likely to have a positive impact on current labour shortage issues, the AMF points out. 

Notably, the regulator is considering repealing the provisions on occupations that are incompatible with the pursuit of representatives’ activities, as long as the advisor complies with proposed new rules. These rules will specify the framework in which a representative may conduct outside activities. “The proposed new requirements concern, among other things, the segregation of the representatives’ clienteles. For the firm and the independent partnership, they concern, among other things, the keeping of records on representatives’ outside activities,” says the AMF.

For example, pursuit of an outside activity must not be likely to cause confusion with the representative’s usual activities. Representatives or their independent firm must report any outside activities that they carry on. The amended regulation would come into force on June 1, 2023. 

Complaint handling 

Following the comments received during its September 9, 2021 consultation, the AMF is now consulting the industry on a draft regulation to amend the Distribution Act. It has reiterated its objective of establishing common rules and practices for financial institutions, financial intermediaries and credit reporting agents. 

The scope of the complaint definition is slightly broader. For some complaints, the AMF’s draft regulation changes the rules and practices for simplified processing to give the financial sector greater flexibility and allow for efficient processing of complaints that can be handled within 10 days of receipt. It also provides for the possibility, under conditions determined by regulation, of extending the time limit for processing a complaint beyond 60 days following its receipt. 

High volume 

“Over the past five years, there has been an annual increase of about 25 per cent in the volume of complaints by consumers,” Éric Jacob, Superintendent of Client Services and Distribution Oversight at the AMF, pointed out during a roundtable discussion on regulation at the Congrès de l'assurance de personnes 2022 on November 15 in Montreal. Jacob adds that during the 2017-2018 period, the AMF handled 737 complaints, while in 2021-2022, it processed more than 1,759 (periods range from April 1 to March 31).

Jacob estimates that about 71 per cent of the complaints over the past five years have come from the insurance industry, with 40 per cent from life and health insurance, 31 per cent from P&C insurance, and just under 12 per cent from the securities industry. These proportions remain stable from year to year, he says. The AMF is constantly seeking to improve these services in terms of quality and efficiency, he adds. 

Other compliance relief 

During the roundtable, Éric Jacob mentioned other opportunities to ease compliance. He told the audience that consultations had been held on optimizing the compliance burden for the sectors covered by the Act respecting the distribution of financial products and services (the Distribution Act). These consultations raised “several interesting avenues for improvement,” he said.

The regulator has begun work on easing some of the career entry rules, Éric Jacob added. “The AMF will be meeting in the coming weeks with individuals who administer and manage the career entry process within firms, in all disciplines covered by the Distribution Act, to further explore some of the options being considered by our teams,” he said.