Ontario’s financial services regulator is consulting on proposed guidance for how and when it issues public warning notices.
The guidance applies to all sectors (except pensions) regulated by the Financial Services Regulatory Authority of Ontario (FSRA), which includes property and casualty insurance. However, the guidance is not applicable to insurance professionals such as brokers that are not regulated by FSRA, the regulator told Canadian Underwriter.
Public warning notices alert consumers to potential misconduct through unlicensed activity and rule-breakers in the financial services markets, FSRA said. The regulator may issue a notice if it discovers one or more of the following factors:
- There is a clear indication of an improper dealing of a FSRA-regulated product or service or an individual or entity engaged in unlicensed activity (e.g. documents, marketing materials, or online presence)
- There is a risk of continuing consumer harm
- The individual or entity has been unresponsive to FSRA’s written attempts requesting they immediately cease conducting unlicensed activity, if applicable
“Public warning notices are intended to curb consumer harm, act as a deterrent to those who carry out unlicensed activities and instill greater confidence in the financial services sectors,” FSRA said in a press release.
FSRA’s proposed guidance document:
- Identifies the individual or entity engaged in the unlicensed activity by name, if there is a person that can be linked to the activity, and states that the individual or entity is not licensed to conduct such business
- Warns the consumer to exercise caution or not engage with the individual or entity who is the subject of the public warning notice because FSRA has identified that they are unlicensed
- Provides details on the type of harm to consumers (e.g. taking personal information from consumers)
- States that FSRA has determined an improper dealing of a FSRA-regulated product or service, or that the identified individual or entity is, or may be, providing regulated services without a licence
- Warns the public that they should not be dealing with unlicensed individuals or entities for a FSRA-regulated financial product or service, as they will not be afforded the same protections as working with those who are regulated.
Depending on the scope and nature of harm to the consumer, FSRA said it may proceed with a more robust media strategy to increase public awareness, share information with other regulators as applicable, and consider pursuing formal enforcement action. The regulator will also keep all public warning notices available on its website in perpetuity.
FSRA told CU it has communicated about the guidance through a province-wide news release, an announcement on its website, through social media channels and by sending an email newsletter to applicable sectors.
“We expect all FSRA-regulated individuals and entities to follow the rules and act in consumers’ best interests,” the regulator said. “The guidance will help deter harm to consumers, uphold market integrity and promote public confidence in Ontario’s financial services.”
To review the proposed guidance and submit feedback, visit FSRA’s consultation page. The consultation period will close Aug. 25.
Feature image by iStock.com/Mongkol Akarasirithada