No shelter in B.C. for banned advisors

But the Insurance Council of B.C. has taken things a step further. In an October 5 release, the Council says it will begin mirroring other regulators’ enforcement against its licensees — a first among the provincial insurance regulators we studied.

Previously, if a licensee had been found by another regulator to cause “harm to the public,” the Council would “usually” impose a similar penalty on the licensee. And, if the licensee’s actions had not resulted in public harm, “Council would inspect the licensee’s insurance practice and, if the inspection did not reveal any concerns, Council typically would not take any additional action against the licensee.”

That’s changed.

“Council has recently reviewed its policy and practice […and] has determined it is prudent to prevent regulatory arbitrage, such as can occur when a financial services professional is permitted to practice in one sector of the financial services industry while simultaneously being unsuitable to practice in another sector,” it wrote.

Read: Regulatory arbitrage: how banned IIROC and MFDA advisors can still sell insurance

Now, if an insurance licensee has been disciplined by another regulator, the Council will take immediate, similar action. Specifically:

1. If an insurance licensee’s licence or registration with another financial services regulator is suspended, terminated, or otherwise ended for a period of one or more years, Council will immediately take equivalent action against the licensee, regardless of the reasons for the other regulator’s decision.

2. If an insurance licensee’s licence or registration with another financial services regulator is suspended, terminated, or otherwise ended for a period of less than one year, or if the other regulator puts the licensee under supervision, Council will, at minimum, immediately place the licensee under supervision for an equivalent period.

3. If an insurance licensee’s licence or registration with another financial services regulator becomes subject to conditions or restrictions due to misconduct that creates the potential for risk to the insurance-buying public, Council will, at minimum, immediately impose similar conditions or restrictions on the licensee’s insurance licence. It may also take other steps.

The Council says B.C.’s Financial Institutions Act already gives it authority to make this policy change — so no legislative amendments were required for this reform.

Read: IIROC and Insurance Council of B.C. to share disciplinary info

IIROC tells us that in terms of fine collection, B.C. is the second-largest province with outstanding fines – almost $4 million, next to Ontario with $20 million since IIROC was created in 2008. Nationally, nearly $30 million is outstanding.

As of October 6, four people who’ve been permanently banned by IIROC or MFDA are still authorized to sell life insurance in Ontario.