For an equitable and just Financial Service industry

Interview and conversation with Richard Proteau
Question 1. Mr. Proteau, as the founder of the Financial Services Customer Alliance, why do you believe there is a need for such an organization in order to protect the consumer?

Well, during my career of 25 years in the financial services, I believed you could change and improve our industry from the inside and I constantly fought for these changes.

Did you have any success?

If I was to judge my success based on my expectations, I would have to answer by the negative. But when I consider how this industry is averse to change, even small changes are significant and therefore I would have to change my answer to the positive. I am pretty proud of the stand I took against the conditional bonus which was offered on Universal Life when I wrote and published an article proving it amounted to fraud. Conditional bonuses disappeared after this. I also fought for the rights of orphan policy owners. This is a 3 year fight in and out of courts which is still ongoing today and this is when I realized the industry could not be changed and improved from the inside. It had to be done from the outside.
Question 2. Why are you so committed to changing the financial industry?

You have to understand there are numerous commercial practices used by insurers and other companies which are illegal in all or some provinces. I stated that if these commercial practices were removed, it would eliminate more than 50% of the infractions perpetrated against consumers in the financial industry. This represents a lot of wrongdoings done against the consumer. This is taking the hard earned money of hard working Canadians to increase the corporate bottom line. This ain’t right. I could have walked away from this but how could I tell my children that if you see something that is not right, you have an obligation to fix it. So walking away was not an option. I do what I preach. Whether I am successful or unsuccessful in changing this industry for the better, I know my children will always to able to look up to me with pride. This is everything to me.
Question 3. You said that financial institutions such as insurance companies use illegal commercial practices, how is this possible? Why are the regulators not intervening?

This is a good question. In fact we can’t proceed with any changes or any strengthening of regulations in any provinces to protect consumers without having the answer. What is the worth and value of the law if it can be ignored? This is why FSCA believes that what we refer as the “Quebec Effect” has to be dealt with. Quebec has the best and strongest laws pertaining to the financial services. FSCA’s research has showed that in one month there are more infractions committed in Quebec than the rest of the country in one year. How do you explain this? It’s not because the regulator which is the AMF is more efficient and it’s certainly not because Quebecers are corrupt. The reason is simple. The AMF allows the insurers to operate in Quebec with commercial practices based on Canadian law and not Quebec law and this constitute violations of the law of this province. This means any licensed advisors dealing with these insurers are also breaking the law. As a result, whether an advisor is prosecuted by the AMF depends on his connections and behavior and not on his actions. This has resulted in many severe contradictions in the justice system of Quebec where for the same action one advisor will be found guilty by a judge of having put the industry in danger while the other advisor will be excused.

This is why I have proceeded with a personal lawsuit against the AMF. I know I will not be able to get justice because of the lack of integrity and objectivity of judges when the AMF is involved. There is an amazing bias there which empowers employees of the AMF to do the wrong thing knowing they won’t be held accountable by judges that are political appointees. But this trial will allow me to subpoena Yan Paquette one previous employee of the AMF and one current employee of the AMF named Marie Pettigrew. I will be able to ask three questions. Why did they hide a fraud perpetrated by Manulife resulting in many policy owners losing their insurance? Who told them to hide this fraud. And what did the AMF got in return?

When you have an employee of Manulife of the name of Couture who publicly told advisors in the Insurance Journal that the AMF and Revenue Quebec could be used against advisors if they help their clients such as a terminally ill client who wants to take an advance on his death benefit through a viatical loan life settlement which is legal in this province, this is a big problem. The industry waited for a rebuttal of this statement made by Couture. To our surprise this did not happen. This is serious when you consider that insurers prefer that terminally ill lapse their policy by taking its cash value out than that they take an advance and keep the policy inforce.

To protect the consumer such as the terminally ill we have to drive a wedge between the employees of the AMF and the insurers.

When laws are a question of convenience, we cease to be a just society; we cease to be a lawful society; conditions necessary for the consumers to believe in the free market.
Question 4. This last statement is a strong statement. It’s almost a political statement. Isn’t it?

Possibly. I can only observe what is going on in our society. People have stopped believing in democracy and that their vote means and can change something. What’s the value of one vote measured against the value of a $1000 dollar plate. Myself, I can’t vote anymore. I tell my children that it is wrong to lie, cheat or bully and I would vote and endorse a political system that only does this. I can’t and a lot people are like me. For me, the true democratic act is not putting an X on a piece of paper every 4 years. You vote through your actions and by defending the values you believe in. I believe if I succeed with FSCA, it’s the start of a new road for me towards democracy.

And this is important to understand. We have ceased to be citizen with the decision of the US Supreme Court in Citizens United v. Federal Election Commission which reduced freedom of speech to spending money literally incorporating our freedoms. You can say this is in the States but the fact is that we are linked to this country. Freedom, justice and access to government have been fully commercialized. We are not citizen anymore we are just consumers of services.

All the pillars that have supported democracy have fallen when you look at labor which has been demonized when it is for example because of labor rights activists that we don’t have child labor in this country anymore and not because of corporate ethics. Freedom of press has disappeared through concentration of ownership of the press.

The next battle will be about consumer rights and this is where we will see if we can reverse this anti democratic tide. Already we are not to a good start and our consumer rights and freedom of choice are privatized. The best example is the Obama Monsanto Protection Act. If we lose the consumer battle, we will never have the opportunity to fight for our citizen’s rights.
Question 5. Are there other organizations which protect the consumer in the financial industry?

Yes there is. There is Options Consommateur and FAIR. But these organizations are not generalist like the FSCA. They are only interested by specific sectors of the financial industry. For example, Options Consommateurs has been very successful in protecting consumers against the bank in the credit industry. FAIR is heavily involved in the investment industry. When I contacted them to discuss the insurance industry, they told me they did not have the resources and the interest to address this industry. This is why the insurance industry will be one of the priorities of FSCA. Insurers have been able to do whatever they wanted without regulatory and consumer oversight. When the cat is not there, the mice dance. It’s time to reintroduce the cat to the insurance household.
Question 6. You state that your services are unique in the fight for consumer rights. Can you tell us why?

Sure. First the National Database is already sending shivers through the industry. Finally we will have data and a written record of what the financial industry is doing. This will allow us to literally grade the industry and I don’t think it will be a pass. I think the data will show a disastrous failing grade particularly for the insurance industry.

Second initiative I am proud of is the Justice League Fund. You know there are truth to be found everywhere even in comic books. The name of this fund makes a reference to the Marvel Comics and the truth of what the Justice League conveys. Even Superheroes have their limit and can only do so much but when you put together your efforts and resources, the sky is the limit. Sadly our justice system is not about right or wrong anymore. Justice has been commercialized and it’s about who has the most resources and usually it’s not the victim. I’ve been in Court fighting for what is right too many times already and I can tell you it’s not our Courts anymore. Citizens are made to feel less than adequate by arrogant judges who have lost the notion of integrity and objectivity a long time ago. For victims this environment is so damaging. If there was a study to be made we would find that our justice system is a leading cause of mental and physical health problems. In fact I would go further. Victims often look at suicide after realizing that judges and the Courts don’t want to know about the truth and that they will never get justice. The Justice League Fund is a way for us to reposition the scales of justice to the right level by giving some weight to the tears of victims against the gold of their oppressors.

Third there is the financial apps and tools that we will make available to the public and which will destroy some of the myths employed by the financial industry against the consumers. For example, dogma such as the Buy/Hold theory offers little benefit to the consumers but offers tremendous advantages to advisors maximizing their commission and maximizing fees for the financial institution. Buy/Hold has been proven as being wrong but it’s still the most employed strategy in the industry. Our app will show the right way to invest.
Question 7 . What about the Class Actions?

I can’t talk much about the Class Actions except to state there will be two in 2015. We have everything we need to proceed. We just have to select the right team to move forward. However I would like to say something. One of the Class Action will name as defendant the regulators that are supposed to act as the protector of the public. I hope the regulators will have a good explanation for the public because I don’t think the public will be too happy.
Question 8. Are Class Actions a good way to hold financial institutions accountable?

Historically no. When you look at one of the greatest class action against insurers which was the vanishing premium scam and scandal, we notice two things. First the class action only partly recovered the losses of consumers. Second the class action did not succeed in forcing the insurer to admit their guilt and therefore there were never any changes in the insurer’s culture. This is because the consumers were not organized. Consumer representation was made of separate individuals seeking justice. In fact after talking with the individual consumers involved in the class action, they all told me that the federal and provincial governments were not interested in how the consumer was defrauded. The governments were only interested in knowing the insurer’s exposure to their scam and fraud and whether the insurers could survive financially to this exposure. As a result, the truth never came out and no meaningful changes were done. But the truth is out there despite attempts in hiding it. It can be found into individual lawsuits such as Ward against Manulife where we see that an insurer like Manulife was indeed responsible for educating and telling advisors on how to sell the vanishing premium concept. We see how the strategy of the insurers to shift the blame to advisors was simply a strategy implemented by cowards and these cowards are not gone. Many of these cowards are now leaders with lies and cheating as part of their baggage and their success. As a result the insurance industry has not improved. Quite the contrary. This is proven by the latest class action in the insurance industry against Transamerica who tried to illegally increase MER on its product to subsidize its reckless buying of different insurance companies.

This is why class actions have to be implemented as part of an overall strategy structured and organized by a strong organization such as the FSCA.
Question 9. What about your investigations?

Again I can't say much because of confidentiality but I want to comment on one investigation because I am so concerned and it’s about Mr. Cuggia. Here we have someone convicted of fraud and there was never a trial. How can this happen in Canada? FSCA as an organization has reviewed what Mr. Cuggia has done and aside from poor administration we can find nothing wrong. In fact when FSCA reviewed the All for one product of Mr.Cuggia we would have endorsed his product because he was reducing the price of group insurance by more than 25% and making it available to marginal group of employees that would have been declined by insurers or would have been charged an extremely high premium. There is one thing I don’t like about private group insurance in our society. Insurers profits enormously by insuring the good risk while element of our society that are at risk can’t get this insurance because they represent the bad risk and the cost of not insuring these people is passed on to society. We are concerned that Mr. Cuggia represented a risk to the profit strategy of the insurers and that he had to be taken down. Again the regulator, the AMF acted as the paid hit man of the insurers and convicted Mr. Cuggia of fraud by paying different parties thousands of dollars to make complaints against him. Again there was no trial and Mr. Cuggia was never given the opportunity to defend himself. In Canada this is not acceptable. This is why we are very interested by the civil lawsuit of Mr. Cuggia. We will follow and monitor this lawsuit and if we found that Mr. Cuggia’s career was destroyed because he was upsetting the profits of insurers we will respond with a very strong legal action. In fact in this case we will be pushing for criminal charges under the Federal Competition Act against those involved and prison terms if it is possible.
Question 10. Your membership is free isn’t it? How will you finance your operations?

Certainly our membership being free will result in certain financial challenges. But it was important for me that this alliance be opened and available to all. This is an alliance and not an organization. Therefore you can’t charge a price to be part of an alliance.

We will also be developing a line of simple financial product that meets the requirements of our Shield program which are a set of standards that we believe are critical. Travel insurance is certainly a type of product we will be considering. By purchasing this product, our members know they will be buying an ethically designed product while at the same time strengthening consumer protection by helping us finance our operations.


Defend consumers by recovering consumer losses created by unethical or fraudulent commercial practices



Protect consumers through the investigation of unethical and fraudulent commercial practices



Change the financial industry through the use of information and by educating consumer to influence the financial industry in adopting ethical and lawful practices.