In an intended decision from the Insurance Council of British Columbia, the council has sanctioned Kenneth David Thom for selling inappropriate products, failing to keep proper records, failing to inform clients about the basic functions of the products they’d purchased and failing to deliver insurance policies or evidence of coverage within a reasonable time.
Thom, a now-retired agent who was first registered in early 1993, is also a former council member. He served from 1998 until 2012 and was a voting member during the last two years of that tenure. This was viewed as an aggravating factor.
The complainants in Thom’s case say they were never provided with a proper explanation of their product’s segregated fund guarantees, terms, durations or any explanation regarding resets. They alleged that they were misled about the 100 per cent market value guarantee and were not informed about deferred sales charges (DSCs). The pair was told that they had full access to their money at any time without penalty. (The clients later instead needed to sell property to pay taxes and other personal expenses.)
Six weeks after making their initial complaint, the complainants additionally told council that the former licensee recommended they cancel their joint life insurance policy, purchased in 1999 with another insurer. “He told them that the agent who sold them the policy only did so to generate commissions from the sale and that the policy was not beneficial to them in any way, but did not provide any further explanation. Based on the former licensee’s recommendation, the complainants cancelled their joint life insurance policy,” the intended decision states. (The agent who sold the couple the policy in 1999 was able to discuss the same day all of the reasons why the clients purchased the policy in the first place – these included paying capital gains tax liabilities, creating a legacy for their children and accessing tax sheltering benefits.)
When the complainants requested that the insurer reinstate their policy, the insurer found no grounds to do so, pointing out that they’d both signed the policy surrender form. “To consider reinstating the policy, the complainants would need to submit an application for reinstatement and provide evidence of insurability (both were in poor health), write a cheque for $13,311.90 for all premiums due and agree to an increase in premiums,” the decision adds.
According to the insurers’ investigation, Thom earned commissions of $65,427.46 and trailer fees totaling $5,328.44 on the sale of the segregated funds to the two clients. Thom’s MGA later confirmed that the case resulted in an errors and omissions (E&O) insurance policy payout to the clients, adjudicated by the former licensee’s E&O provider. “The former licensee stated that if the markets had not declined, the complainants would not have made their complaint,” the council writes.
The insurance company’s consultant, meanwhile, found merit to the complainants’ complaint. The consultant found evidence that Thom promised guaranteed returns between seven and eight per cent, the products were found to be unsuitable and they were sold to the clients without any explanation or discussion of other fee alternatives.
“It was noted that the former licensee told EW that he would sell DSC until DSC was removed from the industry,” the intended decision states. The investigators also noted a lack of a needs analysis for all insurance sales. The consultant recommended that the former licensee should compensate the complainants for their investment loss, calculated at $151,101.88, plus interest.
Thom was terminated in April 2023. In its decision, the insurance council sanctions Thom, fining him $25,000, the maximum penalty allowable. It also assessed investigation costs in the amount of $2,875 and ordered Thom to complete four courses, including note keeping and ethics courses, prior to being relicensed again in the future. If he does rejoin the industry, Thom must also be supervised for two years.
