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Regulatory agencies exist primarily to protect the public by providing oversight, practice guidance, and disciplinary action for the industries over which they have jurisdiction. As part of that oversight, these agencies must respond when gaps are identified and provide guidance and recommendations to improve services. Recently, the Financial Services Regulatory Authority of Ontario, which oversees the province’s insurance and financial services sectors, announced recommendations for changes that could have a significant impact on both sectors, as well as consumers.

About the Financial Services Regulatory Authority of Ontario

The Financial Services Regulatory Authority of Ontario (the FSRA) is an independent regulatory agency appointed by the Minister of Finance and accountable to the Ontario Legislature. The agency was created to replace the Financial Services Commission of Ontario and oversees consumer protections related to a number of industries, including:

  • Property and casualty insurance
  • Life and health insurance
  • Credit unions
  • Loan and trust companies
  • Mortgage brokers
  • Health services they relate to automobile insurance
  • Pension plan administrators
  • Financial planners and advisors

As part of its mission, the agency is devoted to protecting customers by promoting high standards of conduct in the sectors it oversees, responding as needed to changes in the market, and encouraging innovation. In addition, the agency is required by legislative mandate to promote transparency in both sectors as well as to deter fraudulent or deceptive conduct and activities. To that end, the FSRA announced recommendations applicable to both industries at the end of 2021, which could be adopted in the coming months and years.

New Complaints Policy Framework & Best Practices Released, Input Sought from Industry Stakeholders

The FSRA is looking to improve its complaints process so that it is more accessible, fair, timely, and transparent for consumers. To that end, it recently released a Policy Framework & Best Practices document, setting out guidance the FSRA will use in future policy decisions regarding the process, as well as a set of best practices upon which the framework is based.

Nine Best Practices Identified

  1. Complaints resolution is an element of consumer protection frameworks.
  2. Consumers have access to internal dispute resolution (IDR) through their financial services provider.
  3. IDR processes are required to have certain consumer-focused features.
  4. Consumers have access to external dispute resolution (EDR) when their complaints cannot adequately be resolved through IDR.
  5. EDR mechanisms are independent of financial service providers and consumer groups.
  6. EDR mechanisms have the ability to reliably secure redress for consumers.
  7. There is only one EDR body for a particular financial services sector.
  8. Regulators have access to complaints data from their regulated sectors and use that data to strengthen their regulatory efforts.
  9. Regulators serve an oversight role in the complaints resolution process.

The agency is also seeking input and feedback from industry stakeholders until February 15th to help shape future decisions and changes to the complaints resolution process. The news release linked here contains an option to email the FSRA with any comments or suggestions.

Proposed Unfair or Deceptive Acts or Practices Rule to Protect Insurance Customers

Back in December of 2020, the FSRA announced it would be seeking input from insurance industry stakeholders and consumers on a new proposal for a rule with respect to unfair and deceptive practices. Under the provincial Insurance Act, unfair or deceptive acts or practices are prohibited, which are further defined under Regulation O.Reg 7/00. However, the FSRA’s position was that the definitions of unfair or deceptive acts and practices under the Regulation were not reflective of the agency’s principles-based approach to consumer protection. To address this discrepancy, the agency created the Unfair or Deceptive Acts or Practices Rule to “clearly define outcomes that are unfair or otherwise harmful to consumers”.

After consulting with various stakeholders, the FSRA drafted its proposed Rule and recently announced it had submitted the Rule to the Minister of Finance for final approval. Once approved, the Rule will replace the existing UDAP Regulation under the provincial Insurance Act.

The Rule creates a new definition of ‘unfair or deceptive acts or practices’ as “conduct, including inaction or omission, which results in, or could reasonably be expected to result in the outcomes, events or circumstances set out in s. 3 through s. 10 of this Rule”.

The outcomes described in the definition include:

  • Non-compliance with the law;
  • Unfair discrimination;
  • Unfair claims practices;
  • Fraudulent or abusive services related to goods and services provided to a claimant;
  • Incentives such as gifts or rebates could induce a person to purchase insurance products that would not be suitable for their needs;
  • Misrepresentation; and
  • Prohibited conduct in auto insurance applications, quotes or renewals, which could include acting in bad faith, treating a customer in an arbitrary manner, or engaging in unfair discrimination.

The purpose of the change is to remove rigid definitions of specific behaviour as ‘unfair or deceptive acts or practices’ and instead replace them with an outcomes-based definition that is consistent with the agency’s guiding principles. In addition, the agency has indicated that the new Rule will help to facilitate competition and innovation, which will ultimately benefit consumers when it comes to insurance premiums.

For Exceptional Legal Representation in Regulatory Matters Contact Milosevic Fiske LLP in Toronto 

If you are facing regulatory charges and require representation before a tribunal, agency, other administrative body, or in court, contact Milosevic Fiske LLP. We can help simplify what is otherwise highly complex litigation. Our experienced litigation lawyers provide experienced representation to clients in a wide range of regulatory matters, and our team has extensive experience in both insurance disputes and financial losses. Call us at 416-916-1387 or contact us online to learn more about how we can help.