The Autorité des marchés financiers (AMF) recently released a draft regulation that would prohibit the use of deferred sales charges when withdrawing or transferring funds from or changing purchase options in an individual variable insurance contract relating to a segregated fund. The proposed ban is part of the AMF's broader fair treatment of clients initiative and would apply to insurers authorized under Québec's Insurers Act and firms, independent representatives and independent partnerships registered under the Province's Act respecting the distribution of financial products and services. The draft regulation would impact all individual variable insurance contracts relating to segregated funds entered into as of June 1, 2023. In the view of the AMF, sales practices involving DSCs are contrary to the fair treatment of clients. The AMF would also be authorized under the regulation to impose various administrative penalties for breach of the regulation, in the amount of $1,000 for a natural person and $5,000 on an authorized insurer that requires such prohibited fees. The regulation is expected to come into force on June 1, 2023, subject to Ministerial approval. Comments on the draft regulation are due by January 31, 2023.
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