The Independent Financial Brokers of Canada (IFB), submitted its response to the Financial Services Regulatory Authority of Ontario (FSRA), after the regulator requested comments on proposed guidance related to its administrative monetary penalties (AMP) regime.

The association representing 3,000 life and health insurance licensees and mutual fund registrants says it supports the publication of guidance to assist the public and regulated entities to understand FSRA’s expectations and the approach it will take when exercising its authority, but to be effective, they say the regulator needs to better make its regulated sectors aware that enforcement activities have resulted in penalties.

“Although FSRA publishes individual life insurance agent penalties on its website, IFB suggests that it would increase awareness among all life insurance licensees if FSRA developed summary communications on the penalties imposed and the reasons leading to the penalty,” they write. “This would also reinforce that AMPs should not be viewed as a cost of doing business and act as a general deterrent for the sector.”

They add that it is unclear if FSRA has any recourse other than license suspension if the penalties are not paid. More, they say licensees do not always realize the impact disciplinary action will have on their careers – namely that the cases remain in the public domain forever. “The regulated community should be made aware that penalties will be publicly disclosed and remain available in the public, industry, etc., in perpetuity,” they write. “FSRA may want to consider whether the lifetime public availability of the licensee’s contravention is consistent with risk-based principles and appropriate when no threat to the public interest is at stake.”

The submission also brings up the fact that FSRA cannot impose AMPs under the Financial Professionals Title Protection Act. “The inability of FSRA to impose monetary penalties has been the subject of much criticism from some industry stakeholders and investor advocates. Therefore, it is not our intent to rehash it here,” they write in conclusion. “However, we encourage FSRA to engage with the Ministry of Finance on this matter, as we see it as inconsistent with FSRA’s consumer protection mandate and its risk-based approach to regulation, as well as its treatment of those in its other regulated sectors.”