Advisors urged to follow disclosure recommendations

A list of companies the intermediary represents A list of companies the intermediary represents How the intermediary is compensated Eligibility for additional compensation Conflict of interest statement Consumers’ right for additional information “The template is intended to be a response to the regulators that we make appropriate disclosure to our clients,” Geller explained. “I see […]

By Doug Watt | June 20, 2006 | Last updated on June 20, 2006

2 min read

A list of companies the intermediary represents

How the intermediary is compensated

Eligibility for additional compensation

Conflict of interest statement

Consumers’ right for additional information

“The template is intended to be a response to the regulators that we make appropriate disclosure to our clients,” Geller explained. “I see this as a marketing tool and a way of building credibility. It’s also a way to protect yourself against possible future liability. And quite frankly, it’s something our clients deserve.”

Although the document is voluntary, the industry is encouraging all intermediaries to provide disclosure along the lines recommended, Gelgor added.

And if advisors don’t cooperate, the regulators could step in if problems arise, Geller warned. Their response could include prescriptive rules, instead of the principles-based approach the industry favours and, complicating matters further, each provincial regulator would determine its own rules.

In other words the regulators are saying, “You do it or we’ll tell you what to do and that is where we are,” Geller said. “Legislation and regulation is still an option.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/20/06)

Doug Watt

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A list of companies the intermediary represents
How the intermediary is compensated
Eligibility for additional compensation
Conflict of interest statement
Consumers’ right for additional information

“The template is intended to be a response to the regulators that we make appropriate disclosure to our clients,” Geller explained. “I see this as a marketing tool and a way of building credibility. It’s also a way to protect yourself against possible future liability. And quite frankly, it’s something our clients deserve.”

Although the document is voluntary, the industry is encouraging all intermediaries to provide disclosure along the lines recommended, Gelgor added.

And if advisors don’t cooperate, the regulators could step in if problems arise, Geller warned. Their response could include prescriptive rules, instead of the principles-based approach the industry favours and, complicating matters further, each provincial regulator would determine its own rules.

In other words the regulators are saying, “You do it or we’ll tell you what to do and that is where we are,” Geller said. “Legislation and regulation is still an option.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/20/06)

The insurance industry has moved quickly to alleviate concerns about disclosure and possible conflicts of interests since the issue first arose in 2005. But regulators are watching closely and could yet introduce new rules, delegates attending the Advocis conference were warned last week in Victoria.

In the wake of scandals in the U.S. last year, the Canadian Council of Insurance Regulators and the Canadian Insurance Services Regulatory Organizations formed a working group to survey the industry.

Their final report showed no evidence of any wrongdoing and no consumer confidence concerns, noted Sara Gelgor, vice-president of regulatory affairs at Advocis in a session on advisor disclosure and compliance. Still, the working group recommended that the priority of the client’s interest be codified, that performance-linked incentives be restricted and that disclosure and transparency related to compensation be enhanced.

“The sense that we had is that the regulators don’t understand the complexity of the industry and what the impact of their proposals would have on the industry,” Gelgor said.

“This all came from the idea that’s there’s a possibility of a perception of a possible conflict of interest,” added insurance agent Lawrence Geller, who also took part in Friday’s session at the Advocis conference and has been meeting with regulators to discuss the issue.

Geller says the regulators still don’t think the industry has moved fast enough, even though after a series of meeting coordinated by the Canadian Life and Health Insurance Association, the insurance companies, industry associations and managing general agents have already agreed on a disclosure template.

Advocis has taken the process a step further, introducing a web-based tool, from which members can create a disclosure letter. The tool includes:

A list of companies the intermediary represents
How the intermediary is compensated
Eligibility for additional compensation
Conflict of interest statement
Consumers’ right for additional information

“The template is intended to be a response to the regulators that we make appropriate disclosure to our clients,” Geller explained. “I see this as a marketing tool and a way of building credibility. It’s also a way to protect yourself against possible future liability. And quite frankly, it’s something our clients deserve.”

Although the document is voluntary, the industry is encouraging all intermediaries to provide disclosure along the lines recommended, Gelgor added.

And if advisors don’t cooperate, the regulators could step in if problems arise, Geller warned. Their response could include prescriptive rules, instead of the principles-based approach the industry favours and, complicating matters further, each provincial regulator would determine its own rules.

In other words the regulators are saying, “You do it or we’ll tell you what to do and that is where we are,” Geller said. “Legislation and regulation is still an option.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/20/06)

The insurance industry has moved quickly to alleviate concerns about disclosure and possible conflicts of interests since the issue first arose in 2005. But regulators are watching closely and could yet introduce new rules, delegates attending the Advocis conference were warned last week in Victoria.

In the wake of scandals in the U.S. last year, the Canadian Council of Insurance Regulators and the Canadian Insurance Services Regulatory Organizations formed a working group to survey the industry.

Their final report showed no evidence of any wrongdoing and no consumer confidence concerns, noted Sara Gelgor, vice-president of regulatory affairs at Advocis in a session on advisor disclosure and compliance. Still, the working group recommended that the priority of the client’s interest be codified, that performance-linked incentives be restricted and that disclosure and transparency related to compensation be enhanced.

“The sense that we had is that the regulators don’t understand the complexity of the industry and what the impact of their proposals would have on the industry,” Gelgor said.

“This all came from the idea that’s there’s a possibility of a perception of a possible conflict of interest,” added insurance agent Lawrence Geller, who also took part in Friday’s session at the Advocis conference and has been meeting with regulators to discuss the issue.

Geller says the regulators still don’t think the industry has moved fast enough, even though after a series of meeting coordinated by the Canadian Life and Health Insurance Association, the insurance companies, industry associations and managing general agents have already agreed on a disclosure template.

Advocis has taken the process a step further, introducing a web-based tool, from which members can create a disclosure letter. The tool includes:

A list of companies the intermediary represents
How the intermediary is compensated
Eligibility for additional compensation
Conflict of interest statement
Consumers’ right for additional information

“The template is intended to be a response to the regulators that we make appropriate disclosure to our clients,” Geller explained. “I see this as a marketing tool and a way of building credibility. It’s also a way to protect yourself against possible future liability. And quite frankly, it’s something our clients deserve.”

Although the document is voluntary, the industry is encouraging all intermediaries to provide disclosure along the lines recommended, Gelgor added.

And if advisors don’t cooperate, the regulators could step in if problems arise, Geller warned. Their response could include prescriptive rules, instead of the principles-based approach the industry favours and, complicating matters further, each provincial regulator would determine its own rules.

In other words the regulators are saying, “You do it or we’ll tell you what to do and that is where we are,” Geller said. “Legislation and regulation is still an option.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/20/06)

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