New Ontario fairness-to-consumers guideline applies to insurers, FSCO-licensed agents

A guideline on how to treat consumers, released Tuesday by the Financial Services Commission of Ontario, applies to property and casualty insurers, FSCO-licensed agents, and other financial services professionals.

Financial service providers should “conduct a thorough needs analysis to fully understand the consumer’s objectives and needs based on the facts and information obtained from the consumer,” FSCO said in the Treating Financial Services Consumers Fairly Guideline, which is published on the FSCO website.

“If financial products and services are offered digitally, the same level of transparency and disclosure should be applied as with traditional means, in a manner appropriate to the medium, including, where necessary, access to an intermediary who is qualified to provide advice,” FSCO says in the guideline.

FSCO says the companies it regulates need to “get to know” their clients.

“The means and information collected may differ depending on the type of product and legal requirements, but generally, licensees should collect information about the consumer’s financial knowledge and experience; needs; life-stage priorities and circumstances; ability to afford the product; and risk appetite,” FSCO says. “The discussion should be documented.”

Licencees must also understand how their products work, the limitations, exclusions, and “material risks,” FSCO adds.

In addition to companies like mortgage brokers and credit unions, the guideline would also apply to P&C insurers and FSCO-licensed agents, a FSCO spokesperson told Canadian Underwriter Tuesday.

FSCO is taking feedback on the guideline, announcing Tuesday that it “encourages” people to submit written comments.

FSCO will be replaced next year by the Financial Services Regulatory Authority, which currently has a board of directors and was created due to an expert panel recommendation.

CORRECTION:  A previous version of this story reported that FSCO’s Treating Financial Services Consumers Fairly Guideline applied to P&C brokers. In fact, it applies to P&C insurers and FSCO-licensed agents.