The insurance authorities offer new guidelines that are aimed at tightening the expectations of the design and sale of segregated funds – narrowing the gap in the protection of investors between SEG funds and investment funds.
In joint consultations of umbrella group for insurance regulators – the Canadian Council of Insurance Regulators (CCIR) and Canadian regulatory organizations for insurance services (CISRO) – specify proposals describing the expectations of regulators towards insurers and intermediaries when it comes to SEG funds.
The proposed guidelines include, among others, product design, their distribution and sales practices, including determinations on compensation, get to know your client/product, business conflict management and the usefulness of tips and recommendations of intermediaries. It also includes obligations related to the issue of funds, continuous operation, management and disclosure of information.
For example, the proposals describe the approach of regulatory bodies towards insurers selling SEG funds under the feedback option from the charge of the advisor – such as the requirement to offer alternative sales fees structures together with the load return model, enabling intermediaries to make sure that they may recommend appropriate arrangements for sales fees to make customers.
It also specifies that the options for the sale of funds should be designed so that compensation, which agents and indirect other intermediate can expect that they will receive “basically similar” under these various alternatives; Ultimately, it determines the requirements for burdening schedules and annual redemption limits.
“These guidelines close the gaps in the standards related to the sale and servicing (SEG funds), unlike investment funds, ensuring that customers are treated honestly,” said Huston Loke, chairman of CCIR, in a message.
Consultations, in particular, excludes elements of the expectations of regulatory bodies regarding SEG funds, which represent the provisions of the total cost reporting initiative. He notes that these requirements are not open to commenting after she has undergone her own separate consultations.
The regulatory authorities emphasize that the proposals are aimed at working with existing guidelines, including joint guidelines regarding the fair treatment of clients that require industry companies to interest clients’ interests and dominant CISRO standards.
He also noted that although the proposals do not replace the province’s rules, they are to ensure consistency throughout the country and help industry companies and representatives of the SEG fund in fair financing.
“The proposed guidelines CCIR/CISRO Consolidated funds for funds create a coherent domestic standard for insurers and intermediaries, which will be implemented by each province and territory,” said Patrick Ballantyne, chairman of Cisro in a message.
Proposals are available for consultation until April 8.
