Guidance on Consolidated Segregated Funds Proposed by Regulators
Understanding the New Guidance on Segregated Funds
The Canadian Council of Insurance Regulators (CCIR) alongside the Canadian Insurance Services Regulatory Organizations (CISRO) has opened a consultation process regarding new guidance for segregated funds. This initiative aims to enhance clarity in the insurance sector, particularly concerning individual variable insurance contracts (IVICs), commonly known as segregated fund contracts.
Objectives of the Proposed Guidance
The primary goal of the proposed guidance is to establish clear expectations for insurers and intermediaries. According to Huston Loke, Chair of CCIR, this guidance fills crucial gaps in maintaining conduct standards specifically tailored for IVICs, contrasting them with mutual funds.
Enhancing Fair Treatment for Consumers
This initiative emphasizes ensuring that customers receive fair treatment throughout the sales and servicing processes of IVICs. By laying down these standards, CCIR and CISRO are taking significant steps towards better consumer protection within the insurance industry.
National Standards for the Insurance Sector
The forthcoming CCIR/CISRO Consolidated Segregated Funds Guidance will foster a consistent national standard applicable across provinces and territories. This uniformity is fundamental to streamlined operations and coherence within the industry.
Key Components of the Guidance
The guidance outlines various expectations, which include:
- Conducting comprehensive needs analysis and product recommendations tailored to customers’ profiles.
- Implementing robust controls around how commissions are managed, especially in scenarios where intermediaries must repay commissions upon client withdrawals.
- Ensuring ongoing compliance and disclosure related to IVICs, based on recent guidance published.
- Upholding strict corporate governance and oversight regarding segregated fund administration.
Invitation for Industry Feedback
CCIR and CISRO are encouraging all stakeholders, from industry professionals to consumers, to engage with the proposed guidance. Feedback is crucial during this consultation phase, which spans a 90-day period to gather insights and perspectives from across the sector.
How to Participate in the Consultation
About CCIR and CISRO
The Canadian Council of Insurance Regulators is a collaborative body among insurance regulators dedicated to fostering an effective insurance regulatory environment. Their mission includes addressing shared regulatory challenges faced by different jurisdictions.
Meanwhile, the Canadian Insurance Services Regulatory Organizations serves as a forum for regulatory authorities intent on ensuring consistent business standards among insurance intermediaries. This collaboration plays a vital role in preserving consumer protection and trust in insurance practices.
Media Contact Information
For additional inquiries regarding this new guidance, media contacts include Russ Courtney, reachable via email at russ.courtney@fsrao.ca for English media inquiries, and Sylvain Théberge for French media at 514-940-2176.
Frequently Asked Questions
What is the purpose of the proposed guidance by CCIR and CISRO?
The guidance aims to establish expectations for insurers and intermediaries regarding the sale and servicing of IVICs, enhancing consumer protection.
Who can provide feedback on the proposed guidance?
All stakeholders, including industry professionals and consumers, are invited to review and comment on the proposed guidance during the consultation period.
How long will the consultation period last?
The consultation period will last for 90 days, giving ample time for feedback submissions.
What areas does the guidance cover?
The guidance includes areas such as customer knowledge, sales practices, corporate governance, and ongoing product disclosure.
How can I participate in the consultation?
Interested parties can review the guidance on CCIR and CISRO websites and submit their comments via email before the deadline.
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