FSCA has adopted a policy of Zero tolerance against breach of ethics. What is unique about this policy is that it does not target advisors. This policy target employees of insurance companies and employees of the provincial regulators. This is because we have come to the conclusion that breach of ethics are not prevalent between clients and advisors. Most of the breach of ethics happen within the corridors of corporate head office and government offices. We intend to stop this. These employees will be held to the same standards that they use against advisors.
To: Barreau of Quebec
Reference: Request for an investigation
The Financial Services Consumer Alliance (FSCA) is an alliance dedicated to increasing consumer protection and confidence in the financial industry. Currently our main objective is to update current Life insurance legislation to prohibit harmful and even fraudulent practices used in this industry.
Complaint against: Jean-Francois Morin Compliance Director at Desjardins Securite Financiere. 200 rue des Commandeurs 5e Étage Lévis QC G6V 6R2 Téléphone : (418) 838-7800 extension 3051
Ground for Complaint: On April 23, 2014, in the Insurance Journal, Jean-Francois Morin as a lawyer and compliance director of Desjardins made a false statement regarding the requirement of an insurable interest when a change of ownership is made involving life insurance. Specifically quoting the law, as a lawyer and as compliance officer, Morin ought to have known his statement was false. His statement therefore can only have the sole purpose to mislead policy owners and agents on such changes of ownership in making them believe that such changes are illegal. Misleading consumers by telling consumers that the law prohibits such changes would benefit Desjardins by increasing lapse rate on these products and therefore improve profitability. The statement is reproduced here:
“Desjardins Insurance is another supplier repelled by this type of transaction. Compliance director Jean-François Morin sees insurable interest as a shield against these practices. “Contract transfers must always be done in favour of a person who has an insurable interest in the life insured, which is verified when the transfer is requested.” He notes that Quebec law is less tolerant of life settlement agreements than people think. “In Quebec, it is illegal to transfer a contract to a third party who has no insurable interest. Articles 2418 and 2419 of the Quebec Civil Code specifically deal with this.”’
http://www.insurance-journal.ca/2014/04/23/viatical-settlements-stage-comeback-to-insurers-chagrin/
By making this false statement and by not stating that article 2418 give the right to the policy owner to waive the requirement of an insurable interest through consent, Jean-Francois Morin acted unprofessionally.His statement could hurt consumers and agents who would trust the validity of Morin’s statement based on the fact that he is a lawyer occupying a position of influence in the life insurance industry. The invalidity of Morin’s statement is demonstrated in Finance-investissement:
Selon Gaétan Veillette, Fellow administrateur agréé et planificateur financier à Brossard, en Montérégie, il s’agit probablement d’un oubli. «Le manuel omet de mentionner le deuxième paragraphe de l’article 2418 du Code civil qui permet la cession d’une police», affirme-t-il.
Ce point de vue est corroboré par André Bélanger, professeur à l’Université Laval. «L’article 2418 stipule qu’il y ait un intérêt assurable, mais ce même article prévoit une exception d’importance : la possibilité d’obtenir le consentement écrit de l’assuré. C’est en ce sens que la pratique est légale», note le spécialiste du droit de l’assurance.
In addition, there has been an enormous quantity of materials published in the Medias that explain that viatical settlements are legal in Quebec. Jean-Francois Morin knew about this and therefore knew his public statement was false. An example is a text published by the Financial Post
http://www.financialpost.com/story.html?id=8a7866a1-f652-434a-a18d-1eb4c301b38e
A May, 2006, paper by the Canadian Centre for Elder Law Studies notes the anti-trafficking provision never achieved uniformity in Canadian provinces. Saskatchewan, New Brunswick, and Nova Scotia never enacted it while Quebec repealed it in 1974.
As a result of his statement, Jean-Francois Morin did not meet his general duties and responsibilities towards the public as stated in the Quebec Code of Ethics for lawyers and specifically violated the following articles of this Code of Ethics:
DIVISION II
GENERAL DUTIES AND RESPONSIBILITY TO THE PUBLIC
2.00.01. An advocate shall act with dignity, integrity, honour, respect, moderation and courtesy.
O.C. 351-2004, s. 3.
2.01. An advocate shall uphold respect for the law.
He must not utter words or publish writings contrary to laws, nor incite anyone to violate the law, but he may, for good reason and by legitimate means, criticize any provision of law, contest the application thereof, or seek to have it repealed or amended.
R.R.Q., 1981, c. B-1, r. 1, s. 2.01; O.C. 351-2004, s. 4.
2.10. The advocate must promote educational and information measures pertinent to the field in which he practices.
Remedy sought by FSCA
Remedy sought: We are willing to waive the use of disciplinary measures against Jean-Francois Morin if he chooses to act with integrity and honor by correcting his statement in the Insurance Journal.
Also, we want to know if Jean-Francois Morin communicated this false information as a compliance officer and lawyer to the agents and policy owners of Desjardins. If this was communicated, we request that Jean Francois Morin on behalf of Desjardins send a letter to all of these agents and policy owners to reestablish the facts and truth so that none of these agents disclose the wrong information to their clients or that none of the policy owners cancel their policies believing the statement of Jean-Francois Morin
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