Financial advisors and insurance brokers will have to wait several months to learn whether the Canadian Radio-television and Telecommunications Commission will change the telemarketing rules that govern their communications with existing clients.
Those rules are key in determining whether an advisor can call clients who are on the National Do Not Call List.
In March, the CRTC issued a call for comments on the “unsolicited telecommunications” rules to determine whether phone calls and faxes to existing clients by investment and financial advisors, as well as insurance agents and brokers, should be considered telemarketing. The submission period ended on April 19, and a commission spokesman has said the CRTC hopes to issue its ruling within 120 days of that date.
At present, telecommunications by investment and financial advi-sors to existing clients are not considered telemarketing by the CRTC. But those from insurance brokers and agents to their clients are considered telemarketing if they pertain to new products and services. This disparity has sparked criticism, in part because many financial advisors are also licensed to offer life and health insurance and insurance-side investment products such as segregated funds.
The Investment Funds Institute of Canada’s submission to CRTC secretary general Robert Morin states that telecommunications by investment and financial advisors to existing clients should remain exempt from the telemarketing rules.
In that letter, IFIC president and CEO Joanne De Laurentiis cites a December 2008 CRTC circular that says the nature of the financial advisor’s service requires ongoing communication with clients in response to changing circumstances: “The regulatory bodies that govern the mutual fund industry require industry participants to provide a wide range of regular communications with clients.”
Financial advisors have a responsibility to review the suitability of the holdings in their clients’ portfolios on a regular basis and to maintain ongoing contact with them, adds Jon Cockerline, IFIC’s director of policy, dealer issues: “When the unsolicited telecommunications rules were first proposed, we pointed out that as regular phone calls are required by the regulators, they shouldn’t be placed offside by CRTC rules — and the commission agreed with us. That’s where they left things, so we were surprised to learn that the matter had been resurrected when the commission asked for comments on these questions.”
Randy Carroll, CEO of the Insurance Brokers Association of Ontario, was also caught offguard by the CRTC’s call for comments. “I have no idea why this issue is up for discussion again,” he says. “It came completely out of left field.”
Although the existing CRTC rules treat phone calls from insurance agents and brokers to their clients as telemarketing, Carroll says, they haven’t created any problems for his more than 10,500 members.
“There’s a difference of opinion about what we consider allowable under the existing rules and what the CRTC deems allowable,” Carroll says. “We interpret the regulations somewhat differently than they do. But so far, it hasn’t caused any real difficulties for us. We’ve never received a consumer complaint about it, and neither has our regulator.”
Nonetheless, Carroll adds, the potential for problems exists. For one thing, the current rules make it difficult for insurance agents to provide good customer service.
“Suppose a client, who has an auto insurance policy, could save money by combining it with a home insurance policy,” Carroll explains. “At present, an agent is prohibited from pointing that out [if the client is on the DNCL]. Under the current rules, we can’t even call to set up an appointment.”
Another concern, from an insurance perspective, is the requirement of due diligence.
“We have to make sure that the coverages on policies are still applicable and that the client’s circumstances haven’t changed,” says Carroll. “For instance, there have been regulatory changes to Ontario’s auto insurance system and, effective Sept. 1, when someone renews an insurance policy, the terms and conditions will have changed. That’s the kind of situation that would prompt an unsolicited broker call to a client to discuss the changes and any implications for their coverage.”
The unequal treatment of insurance agents and other financial advisors is a real problem for many members of Advocis, according to its president and CEO, Greg Pollock, who says that his organization has received a number of complaints about it.
“The current regulations were designed to protect consumers who didn’t want to receive unsolicited phone calls,” Pollock says. “But the CRTC didn’t think through all the details. Tens of thousands of financial advisors in Canada hold insurance licences and are also securities or mutual funds registrants; in many cases, they have the same clients for both types of products. But while an advisor can call her clients about securities products, she can’t talk to them about new insurance products. That seems inconsistent to us, and we’re pleased that the CRTC is trying to fix it.”
Industry pushes for equal treatment on telemarketing rules
Current regulations regard calls to existing insurance clients differently from calls to investment clients
- By: JoAnne Sommers
- May 3, 2010 March 1, 2019
- 10:36