Provincial regulator proposes penalties against individuals and corporations who impose DSCs on segregated funds
The Quebec Autorité des marchés financiers (AMF) is proposing a ban against deferred sales charges on segregated funds sold within the province.
In a statement published Thursday, the regulator invited comments by January 31 on draft regulations it has published against DSCs on seg funds, which would only apply to contracts entered into on or after June 1, 2023.
The AMF’s proposal comes a few weeks after the Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) released Incentive Management Guidance (IMG) to provide more clarity to industry participants on how insurers and intermediaries should address remuneration and conflicts of interest.
The IMG complements the Conduct of Insurance Business and Fair Treatment of Customers guidance (FTC Guidance) released in 2018.
“The AMF reiterates that the sales practice of using DSCs is contrary to FTC,” the Quebec regulator said in its statement. “Therefore, the AMF is counting on insurers to cooperate in offering holders of contracts entered into before June 1, 2023 an alternative so that they may avoid such charges on amounts invested in such contracts after that date,” the regulator said.
If it pushes through, Quebec’s regulation would prohibit insurers from charging clients in the province certain fees for withdrawing or transferring seg funds, or if they switch to another purchase option.
Individuals who violate the regulation would pay $1,000 in administrative penalties, while corporate offenders would be charged $5,000.
