Total cost reporting (TCR) for both securities and segregated funds is expected to be in place for the statements clients receive starting in 2027.
While there are no requirements in the proposed TCR rule for life agents, “we recognize that [the proposed rule] is likely going to have an impact on agents,” said Mike Winter, senior policy and technical lead, insurance policy, with the Financial Services Regulatory Authority of Ontario (FSRA). “Customers will have questions about their contracts and may want to make some changes to their contracts or their investments after receiving these enhanced statements.”
Winter made the comments during an informational webinar held Wednesday.
FSRA’s proposed rule has requirements for insurers regarding the information clients receive on their annual statements, including fees, charges, performance and seg fund guarantees.
Section 7 of the proposed rule includes a requirement that, at least once a year, insurers remind customers to review their seg fund contracts, contract structures and associated investments, as well as update their life agents about major life changes.
Those reminders “might trigger additional know-your-customer information … on the agent side,” Winter said.
As a result, life agents would need to act or provide advice. For example, beneficiaries may have to be updated or investments may no longer be suitable.
Another question raised during the webinar was whether TCR rules will be the same for securities and mutual funds as for seg funds.
The short answer is no, Winter said, though the Canadian Council of Insurance Regulators and the Canadian Securities Administrators worked collectively on TCR to align ongoing reporting to investors and policyholders.
The securities side has a national instrument framework, while the insurance side has guidance, he said: “They are different regimes and will continue to be different regimes.”
The industry’s implementation challenges were also discussed during the webinar, with FSRA seeking feedback on potential exceptions to the requirements in certain instances when cost and compliance are onerous.
The consultation runs to July 26.