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FSCO Seeking Feedback on Guideline for Fair Treatment of Consumers

The Financial Services Commission of Ontario (“FSCO”) is soliciting feedback on its proposed Treating Financial Services Consumers Fairly Guideline (“Guideline”). This Guideline, which is anticipated to be released later this year, would apply to, among others, those licensed or registered by FSCO in the insurance, credit union/caisse populaire, loan and trust, and mortgage brokering industries (the “Licensees”). FSCO views the Guideline as ensuring a “common understanding about what it means to treat consumers fairly throughout a financial product’s life cycle.”[1]



The Guideline would apply to all Licensees, irrespective of whether they interact with clients and what stage of the product’s life cycle they are involved with. Licensees are not only expected to share in the responsibility of treating consumers fairly but also to have documentation delineating the roles and responsibilities of the Licensees involved with a product or service. Licensees are also expected to ensure that employees, including those not licensed by FSCO, third party contractors involved in a product’s life cycle, and any other intermediaries distributing the product to consumers, comply with these expectations.

The term “consumers”, as used in the Guideline, applies to financial services consumers as well as members of credit unions/caisse populaires and farm mutuals. It also includes both actual and potential consumers of a Licensee.

Principle-based, proportional approach

Given the diverse array of Licensees that would fall within the scope of the Guideline, it is meant to act as a guidance to Licensees as opposed to an exhaustive list of best practices. As such, the Guideline would be implemented in a fashion that is proportional to factors such as a Licensee’s size and ownership structure, the complexity of the product offered, and the sophistication of the consumer.

It is important to note that the Guideline is comprised of statutory requirements, FSCO’s expectations, and examples as to how Licensees could comply with a particular enunciated principle.

Highlights of the Guideline are provided below.  

Expectations for Treating Consumers Fairly

  1. Fair Treatment a Core Component of Culture and Governance Structure

Licensees should build and reinforce a culture of treating consumers fairly both through direction from senior management and the adoption of appropriate policies, procedures and codes of conduct. Such policies should be made public and these procedures should form part of outsourcing arrangements entered into with intermediaries. There should also be measures to assess the effectiveness of such policies, such as through obtaining customer feedback.

  1. Acting with due skill, care and diligence

Licensees selling products and advising consumers are required to not only meet statutory qualifications but also to act with appropriate due skill, care and diligence. Those involved in product design should consider implementing measures to assess the riskiness of products, such as through stress-testing or monitoring products after sale. FSCO also expects Licensees to participate in and/or provide programs on codes of conducts and ethics.

  1. Clear, fair promotion of financial services and products

In addition to meeting applicable legal requirements to provide consumers with product information and illustrations that are accurate, clear and not misleading or false, FSCO expects product information provided to consumers to be:

  • based on industry best practices where there is no statutory format for disclosure;
  • given when it would be most useful to the consumers’ decision-making process (unless statutory requirements provide otherwise);
  • tailored based on the type, complexity and legal requirements associated with a particular product;
  • in plain language where possible;
  • clear regarding a product’s risks, limitations and exclusions as well as any warnings or important statements;
  • based on what consumers have disclosed about their personal situation and financial needs; and
  • clear as to consumers’ rights (e.g., filing a complaint) and obligations (e.g., disclosing material changes).

Marketing materials should be reviewed for clarity and compliance, and where necessary, be approved by product manufacturers. Those Licensees involved in product development should establish controls to ensure that the product is not being inappropriately sold to consumers outside of the intended market.

Finally, the same expectations apply whether the financial products and services are offered digitally or by more traditional means. Where necessary, Licensees should also provide consumers access to an intermediary qualified to provide advice.

  1. Recommendation of Suitable Products

Licensees should keep records documenting that there is a common understanding between them and consumers as to the nature of the products and services to be provided. To ensure that products offered are indeed in consumers’ best interests, Licensees should:

  1. Get to know consumers through the collection and documentation of such information as the consumer’s financial knowledge, needs, risk appetite and financial circumstances;
  2. Fully understand the products by conducting their own due diligence; and
  3. Conduct a needs analysis to understand the consumers’ goals, based on the information collected.

Only after completing these steps should a Licensee provide a recommendation or advise the consumer. Licensees should document not only their recommendation or advice but also how it is connected to the needs assessment, information obtained about the consumer, and the product. The documentation should also indicate if the consumer has chosen to decline the Licensee’s advice.

Licensees not directly interacting with consumers should put in place appropriate controls to monitor the advice provided on products as well as to provide training to ensure those distributing products are aware of legal and market trends.

  1. Managing and Disclosing Conflicts of Interest

In addition to legal requirements, FSCO views the best way to manage actual or potential conflicts of interest is through avoidance. That said, Licensees are expected to have a conflict of interest management policy for all staff and directors/officers as well as intermediaries and third-party contractors involved in the product life-cycle and distribution. Incentives should not only be based on the volume of sales, for instance, but factor in the fair treatment of consumers. Audits on potential product and commission conflicts and biases should also be conducted.

  1. Providing Service and Information Throughout a Product’s Life Cycle

Licensees should have agreements that delineate not only the conditions and scope of contracted services but the respective responsibilities for dealing with matters such as claims handling and post-sale services. Licensees are also expected to provide consumers with:

  • Information and access to claims, benefits, and disputes procedures;
  • Information regarding changes to contractual terms (consent to such changes should be obtained as appropriate);
  • Ongoing service should consumers switch products; and
  • Information regarding consumers’ obligations throughout the product’s life cycle, how to cancel a contract early, and anything else of relevance, including legislative and corporate changes.

As well, Licensees must comply with statutory requirements for the documentation of claims-handling procedures.

  1. Complaints Procedure

Licensees are expected to comply with statutory requirements on complaints procedures and policies, including a system for documenting how complaints are addressed and resolved. If a complaint cannot be resolved, Licensees must give the complaint a final position letter that includes options to seek further redress. Even where there are not any statutory requirements to implement a complaints procedure, Licensees should consider establishing alternative resolution mechanisms. FSCO encourages consumers to first make complaints directly to Licensees.

In any case, Licensees should monitor their complaints procedures not only for effectiveness but also to identify systemic issues that may have to be addressed. FSCO views complaints made as an indicator of how a Licensee runs its business.

  1. Protection of Privacy

In addition to existing privacy legislation on obtaining consent and notifying consumers of a breach, Licensees should have policies and procedures for the protection and use of personal and financial data. This may include establishing safeguards to prevent inappropriate access and creating a safe online environment for consumers. Licensees should also have policies and processes to reduce cyber risk and crime, including a risk management program to understand, detect and address cybersecurity incidents.


Comments on the Guideline will be accepted until May 8, 2018. To ensure that business practices align with both statutory requirements and FSCO’s expectations, Licensees should review the Guideline in detail. Once the Guideline is finalized, Licensees should take steps to revise existing policies and procedures to comply with the final Guideline and implement proper training and procedures. As well, where appropriate, Licensees should revise existing arrangements with intermediaries and third parties to comply with the final Guideline.


[1] See “Public Consultation on Proposed Treating Financial Services Consumers Fairly Guideline,” (page 5175), Financial Services Commission of Ontario,, last updated April 4, 2018, last accessed April 23, 2018.