Canada: Adoption Of Financial Sector Reform Goes Ahead In Québec, But Government Backtracks On Certain Proposed Changes In The Insurance Sector

We previously reported on Bills 141 and 150 - see our earlier bulletins on  Bill 150 and 141.

On June 13, 2018, Bill 141, now the Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions (the "Financial Sector Reform Act") received assent.

The Financial Sector Reform Act brings about significant changes to the insurance sector and regulation of insurers and insurance brokers, financial service cooperatives, deposit institutions, trust and savings companies, real estate and mortgage brokerages, money-services businesses and more.  As a result of the adoption of the Financial Sector Reform Act, several key pieces of legislation are amended or replaced entirely.

This bulletin focuses on the changes to the insurance and insurance brokerage sectors.


As previously reported, as part of its announced reform of the financial sector, the Government of Québec (the "Government") introduced two bills, Bill 150 and Bill 141 in the fall of 2017.

At the time, both Bills contained provisions aimed at reforming the insurance and insurance brokerage sectors. During the legislative review and adoption process, all provisions related to insurance or insurance brokerage that were initially included in Bill 150 were removed. Some provisions were instead transferred into the final version of Bill 141, while others were abandoned altogether.

As a result, the Financial Sector Reform Act is a watered-down version of the initially announced reform. For instance,

  • parts of the reform of the "20% rule"1, the damage were abandoned. Indeed, following a public consultation held in 2017, the Government had announced that it was inclined to extend the rule to the insurance of persons sector. Such a provision was never introduced in either Bull 150 or Bill 141. Changes in relation to the "20% rule" that do result from the Financial Sector Reform Act are detailed below.

  • the controversial abolition of the Chambre de la sécurité financière and the Chambre de l'assurance de dommages, whose respective industry oversight mandates were to be transferred to the Autorité des Marchés Financiers (the "AMF") has been abandoned due to strong industry backlash and concern over consumer protection.

Nevertheless, there remain several significant elements of reform in the Financial Sector Reform Act.

Insurers Act

The Financial Sector Reform Act enacts the Insurers Act which replaces the Act respecting insurance.

Like the Act respecting insurance, the Insurers Act applies to the supervision and control of insurance businesses and of the activities of authorized insurers; in particular, their insurance and other financial institution activities.

In addition, the Insurers Act supplements existing provisions regarding the constitution, operation, dissolution and liquidation of Québec insurers and, if they have an insurance fund, to that fund.

It also assigns responsibility for the supervision and control of insurance activities to the AMF, the regulatory body charged with overseeing financial markets and products in Québec. As such, the AMF will have the authority to issue instructions, guidelines and orders, adopt conservatory measures, request injunctions, intervene in proceedings relating to the administration or enforcement of that Act, and cancel contracts or suspend their performance. Lastly, the Insurers Act sets out prohibitions, monetary administrative penalties and penal provisions.

Act Respecting the Distribution of Financial Products and Services

The most significant elements of change for the industry come under the Act Respecting the Distribution of Financial Products and Services (the "Distribution Act").

As announced, and after much public and political debate, especially coming from industry groups and consumer protection advocates, the Government has chosen to go ahead with the following changes:

Sale of insurance online without a physical intermediary

One of the Government's stated objectives in the reform of the financial services sector was to open up these 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 had already started using the practice, benefiting from the legislative vacuum existing until now.

Without much of a roadmap for governing online sales, the amended Distribution Act now provides that "a firm may offer products and services in a given sector without the intermediary of a natural person. However, it must take the necessary steps to ensure that representatives of its own interact, in sufficient time, with clients who express the need to interact with a representative; the firm must also inform its clients that such representatives are available."

Beyond permitting the sale of insurance without the intermediary of a natural person, the amended Distribution Act does not offer many details as to exactly how the process might be regulated. The Government is expected to adopt separate regulations to that end.

The articles of the Financial Sector Reform Act which amend the Distribution Act regarding the sale of insurance without the intermediary of a natural person are set to come into force on June 13, 2019.

Independence of insurance brokers

In an effort to ensure greater independence of insurance brokers from insurers and other financial institutions, the Distribution Act has been amended to specify that damage insurance brokers must, when offering certain insurance products to a client, be able to obtain quotes from at least three insurers who do not belong to the same financial group.

These brokers will have to maintain information and documentation allowing them to prove that they made "every effort" to comply with this new requirement. This new requirement only pertains to damage insurance products intended to meet personal, family or household insurance needs. It does not, for example, apply to commercial insurance.

Brokers not in a position to comply with this new requirement will lose their "broker" designation and will be required to register as "agents", a new designation created under the amended Distribution Act for those "brokers" that are tied to less than three insurers.

In addition, since the "20% rule" was not abolished under this reform, damage insurance firms will not be able to register as brokerage firms if a financial institution or a financial group or a legal person affiliated with it holds an interest in the firm that is equal to or greater than 20%.

There have not been clear indications from either the Government or the AMF yet as to the timeline and/or deadline for damage insurance firms to modify their AMF registration to either "brokerage firm" or "agency".

Regulation of Mortgage brokerage

The Real Estate Brokerage Act is amended to include a definition of "real estate brokerage contract", which was not previously defined.

The Financial Sector Reform Act also transfers the supervision and control of mortgage brokerages to the AMF, and modifies the composition of, and the 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), and the term of office of the members of the discipline committee.


1 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 firm.

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 2018

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

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

Carol Lyons
Darcy Ammerman
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Related Articles
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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 (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

To Use 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.


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.


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