by Richard Proteau (Author Unraveling the Universal Life Scam and Financial Mobile Application Designer)
Few people in Canada are following the introduction of Bill n°141 in Quebec: An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions.
This is a big mistake as it will have a big impact across Canada.
One of the changes considered under Bill n°141 is to regulate Financial Comparison Sites that consumers used on the internet. It is important to note that I am in favor of the regulation of these sites (if these sites collect personal information and refer this personal information to third parties). I am the first one who made this recommendation in my position paper on the subject. However I believe that the only solution is a Federal regime of regulations. I don’t believe that the licensing of national Financial Comparison sites can be done under provincial regulations.
In the case of Quebec, the changes that are envisioned is akin to using a tank to swat a fly. Bill n°141 absolutely provides no after thoughts about how the new regulations will be implemented and the impact it will have on the financial industry and outside the financial industry. Let’s look at the new provision in question that is included in this Bill modifying provision 71 of the Act:
“A legal person that, without acting as a firm, receives a commission or other remuneration based on the sale of financial products or the provision of financial services must be registered with the Authority. As of its registration, the legal person is, for the purposes of this Act, considered to be acting as a firm in the sector in which the products and services are offered.”
Let’s take RateHub.ca as an example to see what this means. First, Ratehub will now be considered a financial firm as it receives financial remuneration from the sales of financial products. Since Bill n°141 includes not limitations or exclusions in regards to the provisions applying to a firm when this firm is a Comparison site, this would mean all provisions applying to firms under the Act would apply to Ratehub.ca meaning that:
- It must be licensed as a firm in Quebec. Provision 72 of the Act states: Only a legal person that maintains an establishment in Québec may register with the Authority to act as a firm. To get a license, RateHub will be required to open a branch or office in Quebec.
- Provision 75: A firm is registered for a particular sector. Since RateHub operates in mortgage, insurance life, insurance general and investment, this means RateHub will be required to get at least four licenses.
- Provision 77: The legal person that registers must, in addition to paying the fees required for registration, pay the contribution payable to the Fonds d’indemnisation des services financiers pursuant to section 278. This means RateHub to operate in Quebec will have to contribute to the Fonds d’indemnisation. This contribution is paid per license!!!
- Provision 82: A firm may act in a given sector only through a representative in whose respect the firm has met the requirements set out in sections 74, 76 and 77. To be compliant, RateHub would be required to have at least one attached representative licensed in Quebec for each sector.
- Provision 83:A firm must, while registered, maintain liability insurance and this means that RateHub would be required to carry error and omission insurance.
- Provison 103: RateHub will have to maintain a complaint resolution process approved by the AMF and provide a report that mention, in particular, the number and nature of the complaints filed.
- Provision 107: RateHub would be subject to inspection by the AMF which pretty much include anything such as access to computer information…
- RateHub will now be subject to an admin penalty of not exceeding $2,000,000 for each contravention.
- RateHub if the AMF does not like the way it conducts its business could have all of its accounts frozen under an Ex-Parte decision process at the request of the AMF to the Bureau of decisions.
What does this mean to RateHub? Well it means that the business of Comparison shopping has become very dangerous through the liability it can create. If Bill n°141 passed, RateHub will have to plaster on its site that its services are not available in Quebec.This means that Quebecers would lose access to national comparison shopping sites that have proven they can save money to consumers and the reason for this is to protect them.
A big problem with this provision!
What a useless provision. Where is the logic? Now if I am a fraudster and want to operate a Comparison site, the only thing I have to do is NOT to incorporate the site as a moral person and operate it as a physical person and I am safe from this provision. Basically this provision offers no consumer protection. It only makes it impossible for Quebecers to shop for financial services while having unintended consequences on the internet and other economic sectors.
Beware because this provision applies to every moral person whether or not they are a Comparison site!!!
Le’ts assume you have a successful web site and want to monetize it in order to take advantage of your good traffic. You decide to become an affiliate of a Comparison site, insurer, financial firm or representative by including on your web site a piece of code call plugin. This plugin for example would generate a mortgage comparison table. Your web site would receive a pay per click compensation from the lender, mortgage firm or broker.
(IN FACT A CLICK ON A GOOGLE ADD FOR THE CANADA PROTECTION PLAN OR TEACHER INSURANCE WOULD TURN YOUR WEB SITE INTO A FIRM IF SUCH WEB SITE IS OPERATED BY A MORAL PERSON!!!)
Based on this bill, your web site would now be considered a firm if your web site is not just a web site but also a moral person. Each pay per click would be considered a contravention and at $2,000,000 a contravention, this could cost you a lot of money.
It does not matter that you are not a Comparison site, or that your web site is not a financial web site, that you don’t collect any personal info in regards to financial services, your pay for click is a remuneration tied to the sales of a financial service and as a result you are a firm.
No more publicity for you Mr. Quebec financial representative!!!
You are a Quebec financial representative and you want to advertise your service in a newspaper, mobile application, web site, Facebook… by paying a fee, pay per click, traffic commission… for you to do this, the newspaper, mobile application, web site, Facebook would have to be registered as a firm under Bill 141!!!
This would qualify as a form of remuneration based on the sale of financial products…
WILL CTV, CBC, HISTORY CHANNEL… RUNNING FINANCIAL ADS ON TV FOR CANADA PROTECTION PLAN, MANULIFE COVER ME…. BE CONSIDERED TO ACT AS FIRMS SINCE THE ADDS REVENUE IS A FORM OF REMUNERATION BASED ON THE SALE OF FINANCIAL PRODUCTS???
Are you nuts in Quebec!!!
Is referencing outlawed in Quebec? Yes it will be…
Imagine this client in Saskatchewan moving to Quebec. You are a representative in Quebec. This client is referenced to you in exchange for a reference fee. This is illegal unless this lead is referenced by a physical person. If the reference comes from a moral person, the moral person has broken the law and you as an advisor in Quebec having helped the moral person in breaking the law by paying the reference fee will be held guilty of the same contravention.
Basically if you are a Quebec representative and you are thinking about hiring a business to generate sale leads on your behalf, this business would be required to be licensed as a firm for each sector where such sollicitiation is occurring which will never happen. As a result, to obey the law, you could only employ a physical person to generate sales leads.
(And please note Mr. Quebec representative that if you pay any form of remuneration to a moral person for publicity, referencing… in regards to the sale of any financial services, you are guilty of the same infractions committed by the moral person that acted as a firm while not being licensed and you will be subject to the same fines of $2,000,000 per contravention.)
Options Consommateurs pushing the crazies even further…
A nonprofit organization since 1983, their mission is to promote and defend the interests of consumers while ensuring that these interests are respected.
I question the agenda of Options Consommateurs. Firs,t Options Consommateurs published a report stating that the sales of insurance over the internet did not exist (link) which was “Fake News”.
Annik Bélanger-Krams , lawyer at Options consommateurs believe that the right to give information and advice about financial services is an activity that only licensed representatives can do: “personnes qui n’ont pas les compétences nécessaires puissent exercer des actes qui sont actuellement réservés à des professionnels certifiés, dit Annik Bélanger-Krams. Il faut que seuls les représentants certifiés puissent fournir de l’information et du conseil aux consommateurs”
Based on this statement, as an author, I would have to be licensed to publish my book Unraveling the Universal Life Scam as I provide information on an insurance product. I supposed consumers would be better protected if they did not know about this scam!!!
I supposed that after the language police in Quebec you now need the financial thought police!
Please note there is nothing in the law that makes providing information or advice a licensed activity. It is the offering of a financial product this is a licensed activity as the law clearly states:
A representative in insurance of persons is a natural person who offers individual insurance products in insurance of persons or individual annuities from one or more insurers directly to the public, to a firm, to an independent representative or to an independent partnership.
Krams should acquaint herself with the Charter of rights instead of promoting censorship and financial fascism as a way to protect consumers.
But it gets worst with Options Consommateurs. Options Consommateurs believes that Bill 141 does not go far enough. Let’s continue with the web site as our example, Because of Bill 141, you decide not to monetize your web site as an affiliate through a pay per click program. You will still show the plugin promoting the best mortgage rates but you won’t get any money for this. It’s purely informative. Your monetization is strictly based on Google ads and visits to your web site.
Based on Options Consommateurs’ statements this is a consumer threat and you should be required to be licensed. Basically referring traffic to a licensed representative, financial firm or insurer is such a consumer threat as per Options Consommateurs’ belief that you should be regulated as a firm.
Flowing web traffic to a licensed firm or representative (without any exchange of information between site and consumer) is considered a consumer threath by Options Consommateurs. Have they gone insane?
I think if Options Consommateurs wants to identify consumers threats in the financial industry it should focus on Orphans clients, Universal Life as an investment, Seg Funds…
What about the AMF?
One of the main role of the AMF as the regulator is to make recommendations to the Finance Minister in relation to any changes to the law pertaining to financial services. The AMF should have told the Finance Minister that the provision of Bill 141 modifying provision 71 of the Act needed some tweaking and adjustments.
But the AMF did not do this. Why? Well because the AMF is power hungry. I have on records people from the AMF stating that they have are untouchables and have more power than the police. CBC reported how the AMF can come to your home in a fishing expedition escorted by police with a very specific search warrant and ignore the conditions of the search warrant by taking anything and searching anything in your home and even question your children.
Bill 141 modifying provision 71 of the Act gives such broad powers to the AMF, because the AMF now has sole discretion of considering any morale person a firm and therefore falling under its regime of regulations.
