FSRA confirms compliance with the ban on deferred sales charges in new Ontario life insurance contracts
Ontario life insurance customers can invest in new individual segregated fund contracts and access their money without surprise sales charge fees.
Ontario's financial services regulator (FSRA) conducted an industry compliance check to ensure life insurance companies follow FSRA's 2023 Unfair or Deceptive Acts or Practices (UDAP) Rule amendment.
This amendment prohibits insurers from issuing new segregated fund contracts that include a deferred sales charge (DSC) option.
FSRA found that the industry is largely in compliance with this new requirement. The findings are based on FSRA's review of 54 information filings received from 14 insurers in 2023.
FSRA's Huston Loke, executive vice-president, Market Conduct, said, “Consumers shouldn’t have to pay to withdraw their own money, and that’s why we banned deferred sales charges. I am pleased to report that, based on the filed information, insurers are complying with the ban on deferred sales charges in new segregated fund contracts.”
A DSC is a fee that a customer pays if they withdraw money from an individual segregated fund contract before the end of a specified period. Removing the DSC option from new segregated fund contracts supports fair financial outcomes for Ontario consumers.
