D-9.2, r. 10 - Regulation respecting the pursuit of activities as a representative

Updated to 1 May 2020

This document has official status.

chapter D-9.2, r. 10

Regulation respecting the pursuit of activities as a representative

Act respecting the distribution of financial products and services

(chapter D-9.2, ss. 196, 202, 211 and 213).

DIVISION I SCOPE OF APPLICATION

1. The provisions of this Regulation govern the pursuit of the activities of the representatives referred to in section 1 of the Act respecting the distribution of financial products and services (chapter D-9.2).

O.C. 830-99, s. 1; M.O. 2009-06, s. 1.

DIVISION II INCOMPATIBLE OCCUPATIONS

2. The following activities and occupations are incompatible with the pursuit of activities as a representative:

(1)  performing the duties of a judge;

(2)  performing the duties of a police officer;

(2.1)  performing the duties of a minister of religion;

(2.2)  performing the duties of a funeral director or any other similar duties in the funeral services industry;

(3)  pursuing activities as a bankruptcy trustee;

(4)  the exercise of a health-care profession governed by the Professional Code (chapter C-26);

(5)  the exercise of the profession of lawyer or notary;

(6)  the exercise of the professional activity of public accountancy;

(7)  the exercise of the activities of a real estate broker;

(8)  the management of a union, other than a union formed of representatives, or the management of a professional association, or employment by any such organization.

Notwithstanding the first paragraph, the pursuit of activities or professions referred to in any of the subparagraphs hereinbelow is not incompatible with the activities mentioned in such subparagraph:

(1)  the activity or profession referred to in subparagraph 5 or 6 of that paragraph: the activities of a claims adjuster and financial planner;

(2)  the activities referred to in subparagraph 7 of that paragraph: the activities of a mortgage broker, provided the representative pursues activities only in the sector of mortgage brokerage.

O.C. 830-99, s. 2; M.O. 2013-12, s. 1; M.O. 2020-04, s. 1.

3. The following occupations are incompatible with the pursuit of activities as a damage insurance agent or damage insurance broker or a claims adjuster:

(1)  vendor, lessor or repairer of road vehicles, off-road vehicles or boats;

(2)  vendor, lessor or repairer of movable property;

(3)  contractor, as that term is defined in section 7 of the Building Act (chapter B-1.1);

(4)  supplier of services or goods which could be required at the time of an insurance loss.

O.C. 830-99, s. 3; M.O. 2013-12, s. 2.

DIVISION III CONDITIONS AND RESTRICTIONS GOVERNING THE PURSUIT OF ACTIVITIES

§ 1 . — General rules

M.O. 2020-04, s. 2.

4. During the period of validity of his certificate, a representative must comply with the following conditions governing the pursuit of activities:

(1)  he must demonstrate availability and diligence;

(2)  he must forthwith deposit in a separate account held by him as an independent representative or by the firm or independent partnership on whose behalf he acts, as the case may be, all amounts collected or received on behalf of another person in the pursuit of his activities.

O.C. 830-99, s. 4; M.O. 2013-12, s. 3.

5. No representative may, in pursuing activities, take part directly or indirectly in a contest or a promotion providing benefits, as an incentive to promote or sell a product that does not meet the specific needs of his clients.

Notwithstanding the first paragraph, a representative may be reimbursed by a legal person or a third party for the direct costs incurred by attending a conference or a convention, provided that the main purpose of the conference or convention is to provide training on activities governed by the Act respecting the distribution of financial products and services (chapter D-9.2).

O.C. 830-99, s. 5; M.O. 2013-12, s. 4.

§ 2 . — Rules specific to representatives in insurance of persons, group insurance representatives and financial planners

M.O. 2020-04, s. 3.

6. A representative in insurance of persons must, before completing an insurance proposal or offering an insurance of persons product containing an investment component, including an individual variable insurance contract, analyze the needs of the purchaser, or those of the insured, with the purchaser.

Therefore, depending on the product, the representative in insurance of persons must analyze with the purchaser, in particular, the policies or contracts in effect held by such purchaser or the insured, as the case may be, the features thereof, the name of the issuing insurers, the purchaser’s investment objectives, risk tolerance and financial knowledge, and all other necessary elements such as the income, financial situation, number of dependants, and personal and family obligations of the purchaser.

The representative in insurance of persons must record the information gathered for such analysis in a dated document. A copy of the document must be given to the purchaser no later than on the date the policy is delivered.

O.C. 830-99, s. 6; M.O. 2013-12, s. 5.

7. (Revoked).

O.C. 830-99, s. 7; M.O. 2013-12, s. 6.

8. No financial planner may render financial planning services in such capacity unless he has first entered into a written agreement with the client which, as a minimum, specifies the following:

(1)  the nature and scope of the mandate;

(2)  an estimate of the number of hours required to complete the mandate;

(3)  all the sectors or classes of sectors in which he is authorized to act and a description of the financial products and services that are likely to be offered by the financial planner;

(4)  the client’s signature, attesting to the acceptance of the mandate.

No agreement entered into under the first paragraph may oblige the client to purchase a financial product or service.

This mandate must be dated and signed by the financial planner and given to the client.

O.C. 830-99, s. 8; M.O. 2013-12, s. 7.

8.1. No representative in group insurance may render services or offer products in such capacity directly to the policyholder unless he enters into a written agreement with the client which, as a minimum, specifies the following:

(1)  the identification of the policyholder and the person designated as the policyholder’s contact person;

(2)  the nature and scope of the mandate specifying, as a minimum, the following:

(a)  the needs analysis;

(b)  in the case of calls for tenders pertaining to one or more insurance products, a comparison of guarantees, including costs and any differences noted;

(c)  where an insurance contract is renewed, the description of the existing plan and an analysis of group experience.

No agreement entered into may oblige the policyholder to purchase a financial product or service.

This mandate must be dated and signed by the representative. The representative must always give a copy of the mandate to the policyholder or the person designated as his contact person.

M.O. 2013-12, s. 8.

9. The financial planner must prepare a written financial planning report and forward it to his client.

O.C. 830-99, s. 9.

9.1. A representative in group insurance must, when rendering services or offering products in such capacity, give a written report of his recommendations to the person designated as the policyholder’s contact person.

M.O. 2013-12, s. 10.

§ 3 . — Rules specific to mortgage brokers

M.O. 2020-04, s. 4.

9.2. A mortgage broker who receives or collects an amount referred to in paragraph 2 of section 4 must give the party from whom he receives or collects the amount a receipt containing the information indicated in section 28.2 of the Regulation respecting firms, independent representatives and independent partnerships (chapter D-9.2, r. 2).

M.O. 2020-04, s. 4.

9.3. A mortgage broker must, before services are rendered, make a written disclosure of his method of remuneration to the client, indicating:

(1)  the compensation claimed for the services he renders to the client, if applicable, and the conditions on which the compensation may be claimed;

(2)  the fact that he receives remuneration or any other benefit from the mortgage lender or any person for the services he renders to him, if applicable.

A mortgage broker must forthwith make a written disclosure to the client of any change in his method of remuneration.

M.O. 2020-04, s. 4.

9.4. When a mortgage broker proposes a loan secured by immovable hypothec to a client, he must make a written disclosure of the following information to the client:

(1)  the nature of the remuneration or any other benefit that he will receive if the loan is made, if applicable;

(2)  the nature of any other remuneration or any other benefit that he may receive with respect to the proposed loan; and

(3)  the fact that he intends to share his commission, if applicable, and the name of the person sharing the commission.

M.O. 2020-04, s. 4.

9.5. When a mortgage broker refers a client, he must disclose in writing to the client that he may receive a share of a commission, if applicable.

M.O. 2020-04, s. 4.

9.6. A mortgage broker must forthwith make a written disclosure of the following information to the client:

(1)  separately, the number of lenders that made loans secured by immovable hypothec for which:

(a)  he engaged in a brokerage transaction in the previous 12 months; and

(b)  the firm or independent partnership on behalf of which he acts, if applicable, engaged in a brokerage transaction in the previous 12 months;

(2)  the name of the lender that, if applicable, made more than 50% of the total number of loans secured by immovable hypothec or loan renewals for which the mortgage broker, or the firm or independent partnership on behalf of which the mortgage broker acts, engaged in a brokerage transaction in the previous 12 months.

M.O. 2020-04, s. 4.

9.7. A mortgage broker must, before proposing a loan secured by immovable hypothec, collect and record in a dated document the information pertaining to the identification of the client’s needs and the client’s financial situation, including, in particular, the characteristics and terms and conditions of the proposed loan, the immovable that will be charged with the hypothec and the client’s credit history, income, ability to repay the loan and level of financial knowledge.

M.O. 2020-04, s. 4.

9.8. A mortgage broker must identify and ascertain the identity of the borrower, the mortgage lender and, if applicable, of the surety and other parties to the proposed transaction.

He must record the information relating to the identity of the borrower.

M.O. 2020-04, s. 4.

9.9. A mortgage broker must verify and ascertain the legal capacity of the borrower or the borrower’s representative to enter into the proposed transaction and the legal capacity of the mortgage lender and, if applicable, of the surety and other parties to the transaction.

M.O. 2020-04, s. 4.

9.10. When a mortgage broker engages in a brokerage transaction relating to a loan secured by reverse immovable hypothec, he must inform the borrower of the importance of obtaining the opinion of a lawyer or a notary concerning the proposed loan.

M.O. 2020-04, s. 4.

DIVISION IV REPRESENTATION AND CLIENT SOLICITATION

10. Upon first meeting a client, a representative must give the client a document, such as a business card, which indicates the following:

(1)  the representative’s name;

(2)  the representative’s main business address, business telephone number and electronic mail address, if any;

(3)  the name of the firm or independent partnership on whose behalf the representative is acting or the description “independent representative”, as the case may be;

(4)  the titles under An Act respecting the distribution of financial products and services (chapter D-9.2) which the representative is authorized to use in respect of the firm or independent partnership on whose behalf he is acting or the titles under such Act which he is authorized to use as an independent representative, as the case may be.

O.C. 830-99, s. 10; M.O. 2013-12, s. 11.

11. The document referred to in section 10 or any other written representation may contain other information, provided such information is not likely to cause confusion, is related to the pursuit of activities as a representative and is not incompatible with those activities, including the following:

(1)  (paragraph revoked);

(2)  (paragraph revoked);

(3)  the representative’s education and qualifications as well as the titles he holds based on such education and qualifications;

(4)  the representative’s years of experience in each sector in which he pursues activities;

(5)  the description of the products and services offered by the representative.

O.C. 830-99, s. 11; M.O. 2013-12, s. 12.

12. Where the representative deals with the client from a distance, he must communicate to the client the items referred to in paragraphs 1, 3 and 4 of section 10.

Upon request by the client, the representative must give the client the document referred to in section 10 when he first sends other documents.

O.C. 830-99, s. 12; M.O. 2013-12, s. 13.

13. Where a representative uses statistics in his written representations, he must indicate the source thereof.

O.C. 830-99, s. 13.

14. A representative must refrain from engaging in any client solicitation or representation that may cause confusion or that:

(1)  states the representative’s income or financial performance;

(2)  appears to promise results that the representative is unable to obtain;

(3)  uses a visual image or phrase that is likely to cause confusion, such as a trade mark, slogan or symbol.

O.C. 830-99, s. 14; M.O. 2013-12, s. 14.

15. Except in representations directed exclusively at other damage insurance brokers, a damage insurance broker may not, in any manner whatsoever, make representations on behalf of an outside insurer or to the effect that the damage insurance broker can obtain the insurance damage product of an outside insurer.

O.C. 830-99, s. 15.

DIVISION V PRODUCT INFORMATION

16. Where a representative in insurance of persons sells to a client an individual insurance of persons product or an individual annuity the representative must give to the client, no later than on the date the policy is delivered, a legible document indicating the following:

(1)  whether the insurance costs payable under the contract are guaranteed and, where applicable, for how long, and whether such amounts may fluctuate;

(2)  whether the return on the amounts invested through the insurance product is guaranteed or not;

(3)  whether the face amount of the insurance is guaranteed or may fluctuate;

(4)  any specific exclusions contained in the contract;

(5)  if a surrender fee or a penalty is payable if the contract is surrendered;

(6)  (paragraph revoked).

O.C. 830-99, s. 16; M.O. 2013-12, s. 15.

DIVISION V.1 RULES OF CONDUCT OF MORTGAGE BROKERS

M.O. 2020-04, s. 5.

16.1. Mortgage brokers must take reasonable measures to ensure that the persons authorized to act on their behalf in the pursuit of their activities as a mortgage broker comply with the provisions of the Act respecting the distribution of financial products and services (chapter D-9.2) and its regulations, including those of this subdivision.

M.O. 2020-04, s. 5.

16.2. Mortgage brokers must act with respect and integrity.

They must also act with prudence, diligence, objectivity and discretion.

M.O. 2020-04, s. 5.

16.3. Mortgage brokers must act with competence. They must therefore develop and maintain their knowledge and abilities.

M.O. 2020-04, s. 5.

16.4. Mortgage brokers must take into account the limits of their skills and of the means at their disposal. When they do not have the necessary skills, they must not act on behalf of a client without obtaining the appropriate assistance.

M.O. 2020-04, s. 5.

16.5. Mortgage brokers must act with independence in respect of their clients and in their clients’ best interests.

To that end, they must subordinate their personal interests and the interests of any other person or company to their clients’ interests and must not let their judgment be subject to any pressure whatsoever.

M.O. 2020-04, s. 5.

16.6. Mortgage brokers must not place themselves in a conflict of interest.

M.O. 2020-04, s. 5.

16.7. Mortgage brokers must be transparent in respect of their clients.

They must, in particular, explain the nature and scope of their services and, if applicable, the services provided by the firm or independent partnership on behalf of which they act, to enable clients to understand and evaluate their services.

M.O. 2020-04, s. 5.

16.8. Mortgage brokers must appropriately advise their clients and give them all such information as may be necessary or useful.

They must explain to their clients the nature of the fees associated with the proposed loans secured by immovable hypothec and the nature, characteristics, advantages and disadvantages of the loans secured by immovable hypothec that they propose to their clients, including the penalties applicable in the event of failure to comply with the terms of the loan agreement.

M.O. 2020-04, s. 5.

16.9. Mortgage brokers must ensure that the loan secured by immovable hypothec that they propose is suited to the client’s situation and needs.

M.O. 2020-04, s. 5.

16.10. Mortgage brokers must respect and ensure the confidentiality of all information obtained about their clients.

They must use the information only for the purposes for which it was obtained and may not use it for personal purposes.

Mortgage brokers may not be relieved of these obligations without the client’s consent or unless otherwise permitted by a provision of a law or an order of a court.

M.O. 2020-04, s. 5.

16.11. Mortgage brokers must provide their clients with the explanations that they need to understand their remuneration.

M.O. 2020-04, s. 5.

16.12. The compensation claimed by the mortgage broker must be fair and reasonable given the services rendered.

M.O. 2020-04, s. 5.

16.13. Mortgage brokers must not make any false or misleading representations.

M.O. 2020-04, s. 5.

16.14. Mortgage brokers must not advise, encourage or in any way assist in the commission of an illegal or fraudulent act, such as the illegal pursuit of activities as a mortgage broker or mortgage fraud.

They must cease to act on behalf of a client when the client asks them to take an action that is in contravention of this rule.

M.O. 2020-04, s. 5.

16.15. Mortgage brokers must cooperate with the Authority in a transparent and diligent manner and must not mislead it.

Mortgage brokers must not encourage a person to not cooperate with or to mislead the Authority.

M.O. 2020-04, s. 5.

16.16. Mortgage brokers who are informed that their conduct is the subject of a complaint filed with or an investigation conducted by the Authority must not communicate with the complainant or the person who requested the investigation.

M.O. 2020-04, s. 5.

DIVISION VI PROFESSIONAL LIABILITY INSURANCE

17. The insurance contract covering the professional liability of a representative acting on behalf of, but not employed by, a firm must provide for the following:

(1)  a minimum coverage amount of $500,000 per claim and $1,000,000 per year;

(2)  that any deductible amount stipulated in the contract may not exceed $10,000;

(3)  express stipulations to the effect that:

(a)  coverage is provided for liability arising from the fault, errors, negligence, or omissions committed by the representative in pursuing activities as a representative, or arising from the fault, errors, negligence, or omissions committed by the representative’s mandataries, employees or trainees in the performance of their duties, regardless of whether or not such persons are still so engaged on the date of the claim;

(b)  the coverage provided in respect of the activities of the representative during the period for which the contract is in effect extends beyond the period of insurance provided for therein for a further term of 5 years from the date the representative ceases to pursue activities, irrespective of whether or not he is still alive;

(c)  the insurer must advise the Autorité des marchés financiers of its intention not to renew the contract or to terminate the contract 30 days prior to the date of non-renewal or termination;

(d)  the insurer must notify the Authority upon receiving from the representative notice of non-renewal or termination of an insurance contract;

(e)  the insurer must notify the Authority upon receiving any claim under the contract, regardless of whether the insurer decides to honour the claim.

O.C. 830-99, s. 17; O.C. 1013-2003, s. 1.

DIVISION VII POLICY REPLACEMENTS

18. The provisions of this Division apply to all representatives in insurance of persons who replace individual life insurance contracts.

The provisions also apply to representatives in insurance of persons who secure the adhesion of a person to a group insurance contract, and where that adhesion is likely to result in the termination, cancellation or reduction of benefits of an individual insurance policy.

Notwithstanding the first paragraph, the provisions of this Division do not apply to a representative in insurance of persons who intends to replace an annuity of an insurer, including an endowment contract.

O.C. 830-99, s. 18; M.O. 2013-12, s. 16.

19. An amendment made to an existing contract shall not be regarded as a replacement contemplated in this Division.

O.C. 830-99, s. 19.

20. A representative must endeavour to ensure that all insurance contracts are maintained in effect, unless the replacement of the contract is justified as being in the interest of the purchaser or the insured; the representative in insurance of persons who replaces the contract must demonstrate that the replacement is so justified.

O.C. 830-99, s. 20.

21. No representative in insurance of persons may encourage an insured or a purchaser who is not the insured, to cancel, cause to lapse or abandon one insurance contract in favour of another insurance contract, unless he complies with the replacement procedure set out in section 22.

O.C. 830-99, s. 21.

22. Where the purchase of an insurance contract is likely to result in termination, cancellation or reduction in benefits of another insurance contract, the representative must:

(1)  (paragraph revoked);

(2)  complete, prior to or at the same time as the insurance proposal, the form set out in Schedule I if it is in the interests of the policyholder or the insured to replace one contract with another;

(3)  explain the content of the form to the policyholder by comparing the features of the current contracts with those of the proposed contracts and by describing the advantages and disadvantages of the replacement;

(3.1)  give to the policyholder a copy of the form completed and signed by the representative within 5 working days of the signing of the proposal;

(4)  send the form completed and signed by the representative to the head offices of the insurers who issued the contracts likely to be cancelled, by any means providing proof of the date of sending, within 5 working days of the signing of the insurance proposal;

(5)  send a copy of the completed form, within the time limit prescribed in paragraph 4, to the insurer with whom the representative in insurance of persons intends to place the new contract.

O.C. 830-99, s. 22; M.O. 2013-12, s. 17.

23. (Revoked).

O.C. 830-99, s. 23; M.O. 2013-12, s. 18.

24. No representative may prevent an insurer who issued a contract that is likely to be replaced from contacting the insured or the policyholder with a view to dissuading such insured or policyholder from replacing the contract or with a view to offering an equivalent contract.

O.C. 830-99, s. 24.

25. The replacement procedure provided for in section 22 also applies, with the necessary modifications, to the replacement of the following:

(1)  a signed insurance proposal for which:

(a)  the mode premium has been paid in full, in cash or by cheque;

(b)  the signatory of the proposal has given either a bank authorization or written authorization for deduction from salary or a written authorization to transfer funds from one policy issued by an insurer to another policy issued by the same insurer;

(2)  a signed insurance proposal providing for temporary coverage of not more than 1 year, for which the temporary insurance premium has been paid.

O.C. 830-99, s. 25.

26. The replacement procedure provided for in section 22 does not apply to the replacement of an insurance proposal for which the premium has been fully paid but where the medical examination was not conducted with the period stipulated on the conditional receipt.

O.C. 830-99, s. 26.

27. Where an insurer is prepared to issue a contract in accordance with the terms and conditions of the insurance proposal, but subject to payment of an additional premium, the representative must follow the replacement procedure before he obtains a similar contract without any additional or extra premium from another insurer.

O.C. 830-99, s. 27.

DIVISION VIII DAMAGE INSURANCE BROKER OR AGENT ACTING AS CLAIMS ADJUSTER

28. A damage insurance broker or agent is authorized to act, exceptionally, as a claims adjuster pursuant to section 46 of An Act respecting the distribution of financial products and services (chapter D-9.2) under the following conditions and circumstances:

(1)  his pursuit of activities as a claims adjuster must be incidental to the pursuit of activities as a damage insurance broker or agent;

(2)  he must comply with the rules governing the activities of a claims adjuster, with the necessary modifications;

(3)  he must disclose, in writing, to each client with whom he transacts business the type of remuneration he receives for services rendered as a claims adjuster.

O.C. 830-99, s. 28; M.O. 2013-12, s. 19.

29. (Omitted).

O.C. 830-99, s. 29.

SCHEDULE I

(s. 22)

NOTICE OF REPLACEMENT OF INSURANCE OF PERSONS CONTRACT

O.C. 830-99, Sch. I; M.O. 2013-12, s. 20.

SCHEDULE II

(Revoked)

O.C. 830-99, Sch. II; M.O. 2013-12, s. 21.

TRANSITIONAL

2013

(M.O. 2013-12) Section 22. The forms sold by the Authority for purposes of paragraph 2 of section 22 as it read on the date of the coming into force of this Regulation (22 October 2013) may be used until 22 October 2014 to replace an insurance of persons contract, in accordance with Division VII of the Regulation respecting the pursuit of activities as a representative (chapter D-9.2, r. 10).

REFERENCES

O.C. 830-99, 1999 G.O. 2, 2066

O.C. 1013-2003, 2003 G.O. 2, 3005

M.O. 2009-06, 2009 G.O. 2, 3686A

S.Q. 2012, c. 11, s. 32

M.O. 2013-12, 2103 G.O. 2, 2023

M.O. 2020-04, 2020 G.O. 2, 841