Industry braces for

With the break in Parliament for the summer, you have at least three months of using email as a means to contact new clients. It is expected that in the fall, legislation will be introduced before the House of Commons that will effectively ban email communication to clients and prospects without obtaining some form of consent to contact them.

The Electronic Commerce Protection Act (ECPA) (C-27) is currently before the standing committee on industry, science and technology. The act, which is effectively designed to create an electronic communications framework, will curtail the amount of spam and fraudulent electronic communication Canadian consumers receive.

To prevent spammers requires casting a broad net, and so the legislation proposed under the ECPA would differ fundamentally from the recently enacted do-not-call legislation (DNCL), in that you would need consent from consumers prior to contacting them. With the DNCL, you are only prohibited from contacting consumers who have signed on to the do-not-call registry.

While few argue with the need for a better framework to stop spamming and the more destructive practices of fraudulent solicitation, the insurance and advisor industries are a little bit concerned about the scope of the legislation hindering the ability of the industry to contact consumers.

“If you read the legislation, it’s apparent that Industry Canada supports electronic commerce, [but] the job is to create the necessary framework so legitimate businesses won’t be afraid of doing business electronically,” Frank Zinatelli, vice-president of legal services and associate general counsel for the Canadian Life and Health Insurance Association, said at the recent LOMA conference in Toronto. “Before a person can send an electronic message under this legislation, he has to have either expressed or implied consent from the consumer. That can be complicated.”

Express consent is fairly straightforward: you have been given permission by the consumer or client to contact him or her electronically. Implied consent, generally, will refer to a previous existing business relationship, which means you will not be prohibited from contacting existing clients.

The act defines an existing business relationship as somebody you have a contract with or a person you have conducted business with in the previous 18 months of sending a message. It also includes anybody who has made “an inquiry or application within the six-month period immediately preceding the day on which the message was sent.”

“The legislation requires that emails clearly identify who is the sender of this message,” Zinatelli says. “Electronic messages have to allow the consumer to contact the person who sent the message and to be able to unsubscribe to that list.”

Advisor organizations like Advocis are concerned that the ECPA will hinder some very common business practices of advisors who use email and electronic newsletters to attract new business.

“It’s so broad that it could impede, from our point of view, very legitimate business activity. We think there has to be some method to differentiate between legitimate business activity and bogus or fraudulent activity that is misleading and not really advancing the business interests of the country,” says Greg Pollock, president and CEO of Advocis.

Advisors who have been referred or introduced to a new prospect on the do-not-call list have been able to circumvent that rule by sending a friendly email. Pollock, other than doing trade shows and obtaining face-to-face consent from potential clients to contact them, sees prospecting options becoming substantially limited.

“Really, other than speaking to an individual directly, it’s going to be very difficult to obtain new business,” says Pollock..

The more profound impact comes with referrals. Apart from a direct introduction from another client, there doesn’t seem to be any protection in the legislation for referral arrangements, which are the crucial driver of growth for established advisor practices.

“Advisors often hear, ‘I know a friend of mine is looking for some financial advice, why don’t you send him a message?’ Pollock says. “The way we read the legislation, you can’t do that.”

He adds, “As we go through this process, hopefully, this will get clarified and there will be some more flexibility. We agree with the government: we want to get rid of spam; all of us want to get rid of spam. We don’t believe in people misleading others in terms of their representation at the same time. We do want to carry on legitimate business in the country.”

(06/19/09)