The Financial Services Regulatory Authority of Ontario (FSRA) is imposing a $25,000 administrative penalty on Murteza Mohamedali, along with conditions on Mohammedali’s license, after the life insurance and accident and sickness insurance agent escalated his case to the Financial Services Tribunal and won the right to remain licensed – subject to a number of stringent conditions.

FSRA had initially proposed imposing two administrative penalties of $25,000 each in the case, and proposed to revoke Mohamedali’s license for making agreements with clients to pay premiums that were different from the premiums set out in the client’s policy, and for making false or misleading representations in the solicitation or registration of insurance.

At the tribunal hearing, the regulator was unable to make the first allegation stick, while Mohammedali, in his own testimony, admitted to the second.

Licensed since July 2014, FSRA began its investigation into the agent after receiving a life agent reporting form (LARF) from Sun Life alleging that he engaged in misconduct by violating procedures regarding the payment of premiums. The company’s concerns included that a number of policies sold by the agent were terminated shortly after one year.

During its investigation, the company determined that Mohamedali personally purchased 35 bank drafts, using his own funds to pay premiums for 21 clients, 20 of whom were not his immediate family. Of the 164 policies, 101 terminated shortly after one year. Mohamedali paid $354,576, purportedly to earn $308,814.62 in commissions.

In the tribunal hearing, the agent successfully argued that FSRA could not prove that he participated in a commission manipulation scheme or that he influenced or counseled clients to cancel their policies at any time. “He admits to assisting some clients in paying for their insurance premiums by purchasing bank drafts on their behalf,” the tribunal’s reasons for decision states. “His motivation was to help these clients satisfy their insurance needs in circumstances where they had short term affordability issues or lacked bank accounts.” 

He further testified that he gave inconsistent responses to Sun Life and FSRA because he felt scared and intimidated.

Based on the evidence provided, the tribunal’s decision states that it was not persuaded Mohamedali entered into agreements with his clients for premiums different than those contained in the policies they purchased. It also says the substance of what clients told FSRA and Sun Life in their interviews was hearsay.

Despite the tribunal’s difficulty concluding that Mohamedali’s proven conduct contravened regulations, it still agreed that he should not be licensed unconditionally.

In addition to the $25,000 administrative penalty for making false statements to the insurer (on many applications he indicated that payment for the policy was received from the client, with the client’s application when Mohamedali paid the premiums himself), Mohamedali’s license conditions are extensive.

For two years the agent will be permitted to work for three licensed insurers only. He shall not supervise other licensees or work as an upline agent and shall not become an individual with significant control, as defined in the Ontario Business Corporations Act.

A supervisor at his managing general agency (MGA), meanwhile, one with at least three years of experience, must review all applications for insurance prepared by the agent, while Mohamedali must maintain evidence of the supervisor’s review to be produced upon request by FSRA. Both Mohamedali and his supervisor must both also submit quarterly written reports to the regulator.

The conditions also state that FSRA may reassess Mohamedali’s suitability to hold a license at the end of the two-year conditional period.