The proposed amendments would impact the Unfair or Deceptive Acts or Practices (UDAP) Rule under the Insurance Act. After June 1, 2023, it will be a prohibited practice for any new individual segregated fund contract to include a deferred sales charge option. Existing individual segregated fund contracts that already include a DSC option could not be amended in a way that the DSC option becomes more punitive and additional requirements would apply, including new consumer disclosure.
Overview of the Council’s Comments:
The Council supports the proposed ban on DSCs, as well as the general elimination of conflicts of interest and regulatory arbitrage. However, the Council believes that additional disclosure is necessary for customers to fully understand the costs of available or chosen sales options. The Council also urges FSRA to review the ‘Advisor Chargeback’ option for a ban, as it raises inherent conflict of interest issues. Overall, we support the amendments and urges their implementation at the earliest opportunity.