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Cold calling by a non-certified person: A reminder from the FMAT regarding your obligations

Publication date: October 12, 2021

In four recent decisions concerning an insurance-products telemarketing sales campaign, the Financial Markets Administrative Tribunal1 (the FMAT) reminded certified representatives of their obligations with respect to acts reserved for them, their duty to advise, and the rules governing representations to their clients. Here is a look at certain breaches the insurance representatives committed2 that were uncovered by the FMAT.

The Facts

An insurer mandated a company offering call center services to cold call its clients and offer them some of its insurance products. The telemarketing firm used employees who were certified representatives registered as independent representatives with the Autorité des marchés financiers (the Authority).

The sales process began with a non-certified telemarketer contacting the insurer’s clients to offer them an insurance product. The telemarketer’s job was to describe the product and the various coverages available using a text provided by the insurer. When the client expressed interest, the telemarketer would then take the client’s personal information, inform him of the premium for the selected coverage, and transfer the call to a certified representative to finalize the sale.

At that point, the representative’s mandate was to verify the information obtained, and then list the exclusions provided for in the contract—again reading from a text prepared by the insurer—before closing the sale. 

Acts reserved for certified persons

Among the breaches the representatives were alleged to have committed, the FMAT noted that they acknowledged having participated in an illegal practice, stating:

“ participated in the sale of insurance products by persons not certified to do so by merely validating the consumer’s personal information and the consumer’s choice of coverage  after a telemarketer had described the product to the consumer, countered the consumer’s objections, and provided insurance advice. ”3

A trained, supervised professional is expected to fully carry out his or her role and obligations, and refrain from condoning any illegal form of practice. The representatives should have known that the telemarketers who began the process of distributing the product were going beyond what is permitted in that they carried out acts that are reserved for certified individuals, including describing the product, answering the client’s questions and providing insurance advice.

Remember that non-certified individuals are prohibited from describing an insurance product, except when making a cold call. Under such circumstances, the telemarketer may describe the main features of the insurance product but must then transfer the call to the duly certified representative so that he or she may analyze the needs, offer the product that meets those needs, and provide a detailed description of the coverage in relation to the needs identified.

Indeed, the Authority issued a stern warning to this effect in the Notice regarding information collection and insurance advice: “In implementing models where a non-certified person describes the main features of a product, there is a high risk that the non-certified person will perform an act that extends beyond what he or she may perform. The non-certified person must refer the client to a representative when, for example, the client asks a question that could result in the non-certified person performing such an act.” In response to this notice, the ChAD has created a table summarizing acts that are reserved for agents and brokers. ( To be available in English shortly). 

Did you know?

In disciplinary law, the alter ego theory “allows the professional to be held responsible for acts that he delegates to third parties.”4  This concept was developed in a disciplinary decision, which stated that “the professional who delegates to an employee an act that is reserved for him is liable to be disciplined for the fault his employee committed.”5

Duty to advise

The representatives’ reliance on a script prepared by the insurer also breached their duty to advise. The FMAT found that they failed to fulfill their responsibilities in this regard, particularly by:

  • “Not inquiring into their clients’ situations to identify their insurance needs;
  • Not advising them properly and not offering them a product that suits their needs only when it was possible to do so; and
  • Not telling their customers about specific coverage exclusions based on their needs.”6

The professional’s duty to advise is crucial and is necessary to protecting the public. At all times—even when the original cold call, made by a non-certified individual, is transferred to a professional–“[professionals must] inquire into their clients’ situation to assess their needs. They must ensure to appropriately advise their clients regarding matters that fall within the sectors in which they are authorized to act; if they can, they shall offer their clients a product that meets their needs.”7

Then, if the client decides to purchase the contract, but before closing the sale, the certified representative must “describe the proposed product to the client in relation to the needs identified and specify the nature of the coverage offered. Insurance representatives must also indicate clearly to the client any particular exclusion of coverage, if any, having regard to the needs identified and provide the client with the required explanations regarding such exclusions.” 8

However, representatives who simply read a text prepared by the insurer or who carry out instructions that go against their legal and ethical obligations are violating their professional independence. On more than one occasion, the courts have reiterated this principle—one which is fundamental to the practice of certified individuals:

“ As a professional, the respondent had ethical obligations that went beyond any instructions her employer may have given her. We must remember that a damage insurance broker [certified representative] must always safeguard his professional independence and respect the letter and the spirit of his code of ethics, which is of public order. ”9

Representations to clients

The FMAT also sanctioned the professionals for having breached the rules regarding representations and the right to practise.

First, by following the text prepared by the insurer, the certified representatives failed to introduce themselves, as per their obligations; this included indicating the firm to which they were attached or mentioning that they were acting as “independent representatives,” and informing the clients of the sector in which they were authorized to act.

Furthermore, during the first meeting with a client, be it in person10 , by phone or via a digital platform11, the professional must identify himself to ensure that the client receives the following information:

  • his name;
  • his main business address, business telephone number, and e-mail address, if any;
  • the name of the firm or independent partnership on whose behalf he is acting or the description “independent representative”;
  • the titles he is authorized to use in respect of the firm on whose behalf he is acting or as an independent representative.

It is important to keep in mind what the Authority stipulates in its Guide to Rules for business cards and other representations: “Representations serve to provide truthful and objective information regarding your professional practice. Your representations allow clients to have all the necessary information to identify you as a representative, know your field of expertise and contact you easily.”

The FMAT also criticized some of the certified representatives for having participated in the sale of products while remaining attached to a firm that was not participating in the insurer’s telemarketing campaign, and which therefore did not have a distribution agreement with the insurer. According to the Act, “No representative may pursue activities as a representative unless the representative is acting for a firm [or] is registered as an independent representative […]12. Moreover, upon first meeting a client, a representative attached to several firms must disclose to the client the name of the firm for which he is acting.  

Finally, several of the representatives were also sanctioned for having at certain times participated in issuing insurance certificates while not holding a valid insurance certificate or while not being attached to any insurance firm or registered as an independent representative: “[…] no person may act as or purport to be a representative without holding the appropriate certificate issued by the Authority.”13

The Sanctions

The breaches committed by the representatives were sanctioned in accordance with the joint recommendations in the agreements co-signed by the parties.

Administrative penalties ranging from $2,000 to $5,000 were imposed on each of the representatives. 14. Furthermore, the following notice was appended to their insurance representative certificates: “The representative must be attached to a firm of which he or she is not the responsible officer or director, for a period of two years from the date of this decision.”15 As a result, those who were still registered as independent representatives also had their registration struck for a period of two years. At the end of this period, if they wish to re-register as an independent representative, they will have to take the “Ethics and Professional Practice” course again and pass the relevant exam.

The FMAT emphasized that independent representatives “must demonstrate a higher degree of diligence, professionalism and skill, as they are not attached to a firm and are responsible for ensuring their own compliance.”16

The purpose of the sanctions was to deter the representatives from re-engaging in such behaviour and provide them with the tools necessary to practice their profession properly.

In the context of a protective, preventive approach, sanctions are also designed to set an example to prevent other representatives in the industry from acting improperly. This article is an example of such an approach.

[1] Autorité des marchés financiers v. Coulibaly  (decision no. 2020-004-005), Autorité des marchés financiers v. Yuen (decision no 2020-004-001), Autorité des marchés financiers v. Cherif-Ouazani (decision no 2020-004-002) and Autorité des marchés financiers v. Hema (decision no 2020-004-004).

[2]This decision concerns representatives who distribute personal insurance products. However, it also applies to representatives distributing damage insurance products who commit comparable breaches to their obligations.

[3] Autorité des marchés financiers v. Coulibaly (decision no 2020-004-005).

[4] Chauvin c. Beaucage, 2008 QCCA 922.[unofficial translation]

[5] Id.

[6] Autorité des marchés financiers c. Coulibaly, Decision No.2020-004-005. [unofficial translation]

[7] Section 27 of the Act respecting the distribution of financial products and services.

[8] Section 28 of the Act respecting the distribution of financial products and services.

[9] Chambre de l’assurance de dommages c. Légaré, 2010-04-02(B).[unofficial translation]

[10] Section 10 of the Regulation respecting the pursuit of activities as a representative.

[11] Section 12 of the Regulation respecting the pursuit of activities as a representative.

[12] Section 14 of the Act respecting the distribution of financial products and services.

[13] Section 12 of the Act respecting the distribution of financial products and services.

[14] Section 115 of the Act respecting the distribution of financial products and services.

[15] Section 115.1 of the Act respecting the distribution of financial products and services.

[16] Autorité des marchés financiers v. Coulibaly, Decision no..2020-004-005.[unofficial translation]