CF Canada Financial Group Monthly Compliance Training Section 1 – Licensing Requirement Continuing Education Credit Requirement Licensee Profile Change Reporting Requirement Contracting Requirement Referral Fees and Rebating Thursday 5 April 2018

Licensing Requirement Life Licensing Period: - June 1, 2018 – 31 May 2019 - For licenses issued between 1 March 2018 and 31 May 2018, the first filing date will be 1 June 2019. Council rule course must be completed before the first filing date - 2018 filing fee is $190, after 1 June and before 31 July is $355 - After 31 July, your life license will be terminated automatically

Licensing Requirement Continuing Education: - All licensees must have completed 15 hours of continuing education between 1 June 2017 – 31 May 2018, or part of this 12 months period - For licenses issued between 1 March 2018 and 31 May 2018, the first filing date will be 1 June 2019. Council rule course must be completed before the first filing date and must have completed 30 hours of continuing education - 2018 filing fee is $190, after 1 June and before 31 July is $355 - After 31 July, your life license will be terminated automatically

Licensing Requirement Continuing Education: ( Continued ) - For licensees have life license for at least 5 of the last 7 years in a Canadian jurisdiction, and you do not have a professional designation you must have 10 technical hours of continuing education - For licensees have an approved designation, you must have 5 technical hours of continuing education ( CFP, CLU, RHU, FCIA, FLMI, CEBS ) - Some designations like CFP, CLU, FCIA are exempt from continuing education requirement if they are in good standing as a holder of their designation - Excess credits cannot be carried over into the next license period

Licensee Profile Change Reporting Licensee Profile Change Reporting Requirement: - Licensee change of address and contact information ( within 30 days ) - Licensee change of name ( within 5 business days with a fee ) - Licensee has lost of authorization to represent an agency or firm ( 5 business days ) - Licensee has been disciplined, judged or convicted a criminal charges - Licensee has new other business activities including being named as a director, shareholder, executive management position of a corporation

Contracting Requirement Licensee Responsibilities: - Licensee notify Insurance Council of BC - Licensee notify the agency or firm - Licensee provides proof of changes in writing - Licensee has good faith in disclosing changes

Referral Fees and Rebating What is a referral fees? - A fee or compensation may be paid to a unlicensed person - A general insurance agent is considered to be a unlicensed person - Before paying a referral fee, certain conditions must be met: * the unlicensed person did not engage in any insurance activities which include discussion with the potential client about the products, client’s need, and the insurance products’ marketing brochures and materials * a written disclosure must be provided to the client stating that the person is being compensated for the referral, and must be provided before arranging an insurance transaction.

Referral Fees and Rebating What is a referral fees? ( continued ) - The referral fees must be a flat amount, and not directly or indirectly related to the amount of client’s premium or coverage - A copy of the written disclosure is strongly recommended to be kept in client file as a proof of meeting this license condition - A referral fee is a one time payment and should not be paid continuously to the same client - A written disclosure on potential conflict of interest to the client

Referral Fees and Rebating Referrals: ( third party entities ) Professionals, center of influence, clients, friends or relatives: - could be just a straightforward referral without any consideration - joint venture business referring arrangement - regular or irregular referrals - may have written disclosure depends on structure of referral arrangement

Referral Fees and Rebating What is a rebate? Life insurance is not a consumable product: - a rebate means a life insurance agent pay a compensation directly to the client in an attempt to convince the client to buy from the agent - rebates shift client’s focus on incentives instead of values - purchase decisions should be based on needs and affordability

Referral Fees and Rebating How rebates work in BC? Section 79 of BC Insurance Art: - 31 December 2004 was amended to allow a premium rebate up to a prescribed amount or percentage, payable be less than 25% of the premium - section 94 of the Act was amended to prohibit only coercive tied selling of financial products

Referral Fees and Rebating How rebates work in BC? ( continued ) - Rebate is not allowed and prohibited by all insurance companies in Canada - Insurance companies will terminate the agent if there’s evidence to prove the agent had committed rebating to clients

Next Compliance Training Thursday 3 May 2018 Code of conduct & suitability

Thank you! ANY QUESTIONS?