What is the Financial Quackery Award?
A quackery used to be the promotion of fraudulent or ignorant medical practices. A quack often referred as a snake oil salesman is someone who knowkingly employs fraud or is someone who has little knowledge or skills to do what he is pretending to do.
Unproven, usually ineffective, and sometimes dangerous medicines and treatments are peddled by these quacks.
We believe that quackery is not the exclusive domain of medicine. There are a lot of quacks in the financial industry. Financial quackery is the misrepresentation of facts in the promotion of financial products or services by someone in a position of power, influence or trust over the consumer.
The 2016 Financial Quackery Award was created to put the light on the all the quackeries plaguing the financial industry. Ten nominees are selected but only one can win this award. In 2016, this award only applies to the insurance industry but it will be extended to other part of the financial industry in 2017
Presenting the TEN nominees for the Financial Quackery Award
1. Financial Services Commission of Ontario (FSCO)
1. FSCO for declaring that the solicitation of life policies by charities is prohibited. In trying to illegally restrict a legal activity to close an organization which solicited policy donations on behalf of charities, FSCO has opened a can of worms. By selectively applying the law against an organization involved in life insurance donation to charities, the Ontario regulator has confirmed our legal opinion that the provision in the Insurance Act stating that it is illegal to solicit the transfer of a life policy also applies to charities. In fact, aside from insurers, this prohibition on solicitation applies to all since there are no exemptions. FSCO will soon learn that selectively applying the law has consequences.Solicitation by charities illegal
AMF/Chambre Financiere: For finally admitting that selling life insurance directly in Quebec is illegal resulting in the admission that they have not applied the law for 20+ years. Contrary to other provinces, the ability to sell insurance directly to the consumer without a licensed physical representative in Quebec falls under a regime of exceptions. Exceptions apply to a listed underlying product that is sold and where the insurance is attached such as a credit product, mortgage. However insurance has been sold illegally directly to consumers by insurers, universities, associations violating this regime of exceptions while the AMF look the other way. Now the law must be updated and the AMF and Chambre Financiere are trying to prohibit the direct selling of life insurance while hiding to the legislator that the direct selling of insurance is already occurring and is quite common in this province.
3. Greg Pollock/Advocis
Greg Pollock/Advocis for stating publicly in the Insurance Journal that orphan policies were not a big deal. Orphan policies/vested commissions paid to
unlicensed third parties has been a plague on the insurance industry. Insurance products must be sold by licensed representatives to protect consumers (this is what is stated
by the industry) because life products are so complex.
However service commission can be paid to unlicensed third parties to provide service on life policies where they are legally prohibited to provide such service and this means that it is the consumer who must provide service on his own policy. Suddenly the life product is not complex anymore and the consumer can manage an insurance product. It is a big deal because high lapses on orphan policies has been well documented and targets seniors by ensuring that orphan life policies are cancelled prior their death. Greg Pollock on orphan policies
4. Peter McCarthy CEO BMO/AIG
Peter McCarthy truly showed how the insurance culture is built upon deceit and unethical behavior. This lack of ethics is permeating the life insurance industry. From Empire, Transamerica to AIG/BMO, Thibault has left quite a trail of fraud behind him. It shows how executives such as Peter McCarthy of BMO were willing to cozy up to this fraudster knowing what he had done and what he was doing for the moment Thibault was bringing the sales. When Thibault was caught, Peter McCarthy like the Judas and liar that he is denied under oath not remembering that he intervened in the Thibault affair in favor of Thibault; declaration that was proven false by emails of McCarthy. McCarthy’s role in protecting Thibault shows how far an industry is willing to go to sell Universal Life policies.
5. Canadian Council Insurance Regulators (CCIR)
CCIR for failing to recognize the existence of Managed General Agents involved in the sales of life insurance as an intermediary to the life insurance companies. MGAs are still not recognized in the Insurance Act of most provinces and this means that insurers have illegally delegated the responsibilities imposed upon them by the Insurance Act of the provinces to a third party who is not recognized under the law creating a legal vacuum which has harmed consumers. Because of CCIR not doing their work, it has been documented how consumers lost their life saving because of this regulatory vacuum. MGA insurance loophole
6. Society of Canadian Acturies
Actuaries of this society have devised amongst themselves a strategy that could be used to inflate the cash values produced by their illustration software with the sole purpose of deceiving consumers. FSCA has a transcript of this meeting and conversation! Unraveling the Universal Life Scam
7. Saskatchewan Government
The Saskatchewan government for trying to modify the Insurance Act in secret where the ownership rights of life insurance policy owner would be retroactively restricted. Modifying the Insurance Act would give the insurance companies a monopoly on defining the value of a life insurance policy by forcing policy owner to cancel/surrender their policy in favor of the insurance companies at less than Fair Market Value.
8. CALU and PPI Financial
CALU and PPI for creating the 10/8 concept and selling this concept to the wealthy who were interested in tax avoidance. To promote the avoidance of taxes, CALU and PPI were willing to create a concept that had the potential of destroying the Canadian economy through the compounding of tax deductible interest. They then use their influence over the Canadian government to modify the Income Tax Act allowing the surrender of policies without triggering a taxable disposition therefore protecting those who avoided taxes by ensuring they could keep their illicit gains.
Canadian Health Life Insurance Association for being such an irresponsible and unethical organization. It took 40 years for CHLIA to figure out that sales incentives based on sales quotas were illegal and a conflict of interest when portraying that insurers were using independant advisors. Whether it is for illustrations of Universal Life, vested commissions...CHLIA has put the interests and profits of its members (insurers) ahead of Canadians
10. The Insurance Journal
In view of the poor journalism existing in the financial industry, it was only fair to include one of the financial Media. It was a close race between Insurance Journal and Finance et Investissments. Insurance Journal won the nomination because of its constant reporting of one sided story with the of protecting the insurance industry by downplaying facts and event. Whether it is on orphan policies where the Insurance Journal did not challenge Pollock’s allegation that orphan policies were not a big problem or not challenging Desjardins stating that insurance to remain legal after issue need to have an insurable interest with the goal of creating a climate of fear against life settlements, Insurance Journal constantly reminds us how journalism has fallen in Canada. However, once in a while, Media such as advisors.ca (which is far from being perfect) reminds us how journalism is important by doing an amazing investigation on the Thibault fraud exposing the fraudulent culture of the insurance industry. Note: Both the Insurance Journal and Finance et Investissements have censored the biggest news story of 2016 involving AIG/BMO relationship with Thibault and how AMF refuses to act as regulator...