Canada: Much Awaited Bill 141 Promises To Shake Up Legislation Regulating Insurance, Financial Services And Real Estate And Mortgage Brokers In Quebec

On October 5th, 2017, Quebec Finance Minister Carlos J. Leitao introduced Bill 141 titled An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions (the "Bill").

The omnibus Bill is an enormous 472 pages and proposes major reform for the damage insurance, persons insurance, financial services and real estate and mortgage brokerage sectors in Quebec.

An announced reform

It has been some time since the Quebec Government announced its intention to reform these key economic sectors. The Bill, which has been in the works since 2013 and was finally announced in the 2017-2018 Quebec Economic Plan1, suffered several setbacks before being introduced earlier this month. The introduction of the Bill has been received with an expected mix of applause and criticism from those in the affected industries that feel they stand to gain or lose.

As stated in the Bill, the proposed amendments to existing laws are aimed mainly at (i) strengthening consumer protection while (ii) allowing financial institutions and market intermediaries to adapt their products and practices to new technologies.

The Bill, if it becomes law, has the potential to significantly impact the day-to-day operations of many organizations and professionals in the insurance, financial services and real estate and mortgage broker industries.

Overview: a reform centered around modernisation and consumer protection

a) Legislative shuffle

This Bill proposes a reform of the laws governing the financial sector in Quebec. As a result, several key pieces of legislation will be amended or replaced entirely.

Some of the key legislative changes include the enactment of the Insurers Act to replace the Act respecting insurance. The Insurers Act contains provisions governing the supervision and control of the insurance sector and the activities of insurers authorized to carry on business in Quebec. Of note, the Insurers Act will allow insurers to sell their products without the intervention of a physical intermediary, opening the door to the sale of insurance products entirely online.

The Bill also amends the Real Estate Brokerage Act to: (i) define real estate brokerage contracts, (ii) transfer supervision and control of mortgage brokers to the Autorité des Marchés Financiers ("AMF"), and (iii) modify the composition and rules for appointing members to the board of directors of the Organisme d'autoréglementation du courtage immobilier du Québec (real estate brokerage self-regulating body).

The Bill amends the Act respecting the distribution of financial products and services. Most significantly, (i) the supervision of mortgage broker activities will now fall under the scope of this law, (ii) firms will be allowed to offer financial products and services by modern technological means (i.e. online), (iii) the Chambre de la sécurité financière and the Chambre de l'assurance de dommages will be abolished, and (iv) the AMF will be entrusted with the responsibility of controlling representative activities, including ethics and training, and restricted certificates for distribution without a representative will be eliminated.

The Act respecting the Autorité des marchés financiers becomes the Act respecting the regulation of the financial sector. There is a serious effort made in the Bill to centralize all financial services regulatory and enforcement efforts under a single regulator, the AMF. As a result, the AMF's mandate will be expanded to include industries it did not previously regulate, such as mortgage brokering. The legislation also includes several new measures to strengthen consumer protection.

Other miscellaneous amendments are included in the Bill. For instance, the Quebec Civil Code is amended to allow funeral insurance contracts. The Automobile Insurance Act is amended to regulate the transmission of information to an insurer about an insured person's driving experience when that person seeks to obtain automobile insurance.

In total, 60 pieces of legislation will be amended by this Bill.

b) Key policy changes

Abolition of the Chambre de la sécurité financière ("CSF") and the Chambre de l'assurance de dommages ("ChAD") and strengthening of the AMF's oversight power

One of the Government's goals with the Bill is to harmonize the regulatory oversight of the insurance and financial services industries by creating a one-stop shop for regulation and implementation.

There was some speculation that the two chambers, the CSF overseeing the group insurance, insurance of persons and financial planning services industries on the one hand, and the ChAD overseeing the damage insurance industry on the other hand, might be abolished as part of the reform.

The CSF and the ChAD, each responsible for the ethics, training and discipline of its members, had been criticized in recent years for their lack of rigor. Despite warnings that the abolition of the two chambers would put consumers at risk, both are now set to be abolished and their activities absorbed by the AMF.

Sale of insurance and financial products online

The legislative innovation to permit sales of insurance products online came as no surprise but is nonetheless raising some concern from a consumer protection perspective.

One of the Government's stated objectives was to open up these financial services industries to new technologies, namely online platforms. The Government was forced to specifically address the sale of insurance products online (i.e. without the involvement of a licensed broker or sales representative) because certain insurers have already started using the practice, benefiting from the legislative vacuum existing at the time.

Without much of a roadmap for governing online sales, the Bill articulates in very few articles, that firms will now be able to offer products and services "without the intermediary of a natural person".2 Eligible firms will have to be present in Quebec and hold an appropriate license from the AMF, and consumers will have a 10 day cooling off period in which they may cancel policies contracted without an intermediary. At this stage, the Bill does not offer any more details on the question.

Notably, the Bill does not limit the types of products that may be sold online, which is a cause of concern for some. The concern stems from the fact that while some products, like home or car insurance, have become fairly standardized; other products like life insurance are much more complex and may be unsuited for sale without appropriate guidance.

Real estate and mortgage brokerage

The regulation of mortgage brokerages will be taken out of the Real Estate Brokerage Act and inserted into the Act respecting the distribution of financial products and services. The Government now considers mortgages to be "financial products". As such, the AMF will overtake the training, ethics and oversight of mortgage brokers.

The regulation of real estate brokers will remain under the Real Estate Brokerage Act. Nonetheless, the Bill also tightens various oversight measures within the Real Estate Brokerage Act, mainly as it pertains to the Organisme d'autoréglementation du courtage immobilier du Québec's (OACIQ) mandate.

Consumer protection

One of the major concerns throughout this reform will be the manner in which consumer protection issues are addressed. There has already been a public tug-of-war between the Government and different industry stakeholders, each claiming that the reform would make consumers better or worse.

Nevertheless, the Bill proposes several measures aimed concretely at improving consumer protection in the insurance and financial services industries. For instance, the Bill will broaden the eligibility standards for compensation by the AMF Financial services compensation fund and put in place an advisory committee made up of consumers of financial services.

Strengthening the Financial Markets Administrative Tribunal

The Bill also provides for a reinforced role and status of the Financial Markets Administrative Tribunal, where all disputes arising out the AMF's new mandate will now be heard.

c) Intentionally left-out

Revision of insurance brokers independence and ownership rules

Following a consultation on the famous "20% rule" [3] earlier this year, the Government promised to review the application of this rule and other conflict of interest rules in general affecting the insurance brokerage industry. During the public consultation held last spring, the Government asked for feedback as to whether the rule was still necessary and whether it remained the best way to manage conflicts of interest and protect consumers.

Interestingly enough, in the wake of the public consultation, certain insurers publicly spoke out in favor of keeping the 20% ownership rule intact. While it was expected that the Government would address this issue as part of the present reform effort, the Finance Minister has announced that the question will be addressed at a later time.

Conclusion

Although the content of the Bill does not result in many surprises, the legislative changes that it encompasses are likely to bring significant change to the industries concerned. It remains to be seen how the marketplace will respond to the explicit acceptance of online sales of insurance and financial products without an intermediary -- that is, whether it creates new business opportunities and whether this is offset by consumers who exercise the right of rescission.

It also remains to be seen whether the AMF can effectively centralize and strengthen oversight of the whole industry all at once.

Footnotes

1 The Quebec Economic Plan – March 2017, available in full here; The Quebec Economic Plan, Additional Information 2017-2018, available in full here, p D.4.

2 See s. 487 on p. 380.

3 The 20% rule is found in ss. 147 and following of the Act respecting the distribution of financial products and services and mandates that no insurer can hold more than a 20% interest in any general insurance brokerage firms.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2017

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Carol Lyons
Darcy Ammerman
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions