The Financial Services Regulatory Authority of Ontario (FSRA) has initiated enforcement action against a managing general agent over its training practices for new life agents.
FSRA proposed on Monday to impose a compliance order on Calgary-based Greatway Financial Inc. The regulator alleged that Greatway’s mandatory training teaches life agents to sell overfunded universal life policies using an insured retirement plan (IRP) to all consumers, regardless of their financial circumstances.
An IRP strategy is typically considered suitable for wealthy clients seeking tax strategies beyond registered accounts, FSRA said. It also alleged that Greatway misrepresented the strategy and didn’t communicate the risks.
“Greatway’s training instructs agents to mislead consumers by deliberately not providing consumers with an adequate understanding of the financial product that they are purchasing,” FSRA’s notice of proposal stated. “The training specifically instructs agents to not inform consumers about the insurance aspect of the life insurance product that supports the IRP,” directing agents to focus on the savings and investment aspects instead.
In a statement, Greatway responded that FSRA’s report doesn’t reflect how it operates. Its agents “are trained to thoroughly explain to their client the life insurance product for at least two hours, including the key risks and disclosures of the policy,” the company said.
The firm said it will request a hearing before the Financial Services Tribunal.
Last month, FSRA released a review of managing general agents, including Greatway, that found some life insurance agents were paid for sales made by agents they recruited. The regulator said it would release draft interpretation guidance for public consultation this fall and hold consultations in 2023 on a draft proposal to expand MGA regulation.