the Matter of The FINANCIAL INSTITUTIONS ACT (RSBC 1996, c.141) (the "Act")
and The INSURANCE COUNCIL OF BRITISH COLUMBIA ("Council")
and JACQUELINE NICOLE BABCOCK (the "Licensee")
ORDER As Council made an intended decision on April 11, 2017, pursuant to sections 231 and 236 of the Act; and
As Council, in accordance with section 23 7 of the Act, provided the Licensee with written reasons and notice of the intended decision dated June 28, 2017; and
As the Licensee has not requested a hearing of Council's intended decision within the time period provided by the Act;
Under authority of sections 231 and 236 of the Act, Council orders: 1. The Licensee is fined $5,000.00. 2. A condition is imposed on the Licensee's General insurance licence that requires the Licensee to pay the above-ordered fine no later than October 18, 2017. If the Licensee does not pay the ordered fine in full by this date, the Licensee's General insurance licence is suspended as of October 19, 2017, without further action from Council and the Licensee will not be permitted to complete any subsequent annual filings until such time as the ordered fine is paid in full.
This order takes effect on the 18th day of July, 2017.
Michael Connors, CIP, CRM , Insurance Council of British Columbia
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INTENDED DECISION of the INSURANCE COUNCIL OF BRITISH COLUMBIA ("Council")
respecting JACQUELINE NICOLE BABCOCK (the "Licensee")
Pursuant to section 232 of the Financial Institutions Act (the "Act"), Council conducted an investigation to determine whether the Licensee acted in compliance with the requirements of the Act by entering false information relating to Insurance Corporation of British Columbia ("ICBC") Autoplan transactions in an effort to override outstanding toll bridge debts.
An investigation report was considered by Council at its April 11, 2017 meeting, where it was determined the matter should be disposed of in the manner set out below.
PROCESS Pursuant to section 23 7 of the Act, Council must provide written notice to the Licensee of the action it intends to take under sections 231 and 236 of the Act before taking any such action. The Licensee may then accept Council's decision or request a formal hearing. This intended decision operates as written notice of the action Council intends to take against the Licensee.
FACTS The Licensee has been licensed in British Columbia since 2008 and has held a Level 2 general insurance agent licence since March 8, 2016.
Overview: Toll Bridge Debt In June 2015, ICBC commenced an investigation after becoming aware that some insurance licensees may be entering false information relating to ICBC Autoplan in an effort to override outstanding toll bridge debts. Under Volume 1, section 12.5 of the ICBC Autoplan Manual, the Toll Bridge Restriction requirements state that "customers who have unpaid toll bridge fees are subject to a refuse to issue (RTI) by ICBC on their driver licences, vehicle licences, and . insurance policies."
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Intended Decision Jacqueline Nicole Babcock LIC-173187C108280Rl I COM-2017-00138 June 28, 2017 Page 2of5
For the period under review, there were two toll bridge administrators, Quickpass for the Golden Ears Toll Bridge ("GETB") and TReO for the Port Mann Toll Bridge ("PMTB"). Since the initial investigation, TReO now has the capacity to administer both bridges.
An R TI restriction related to toll bridge debt was applied differently depending on the bridge. For the PMTB, an RTI restriction was applied if more than $25.00 was owed and the toll was over 90 days past due; and for GETB, an R TI restriction was applied if the toll debt was over 150 days past due.
An insurance licensee was not able to accept payment or make payment arrangements for toll bridge debts on behalf of a customer. In such situations, an insurance licensee was to direct the customer to contact the applicable bridge administrator to pay the outstanding toll bridge debt. An insurance licensee was then required to confirm that the customer had paid the toll bridge debt in full before processing an ICBC Autoplan transaction.
ICBC Investigation An R TI restriction relating to a toll bridge debt could be overridden if an insurance licensee entered a receipt number that was issued by Quickpass or TreO to a customer upon the payment of an outstanding toll bridge debt. Valid receipt numbers contain a combination of letters and numbers.
For the 18-month period from January 1, 2014 to June 15, 2015, ICBC compared all of the valid receipt numbers issued to customers by Quickpass and TreO, to all the receipt number entries made by every insurance licensee into ICBC's system for the same period. This resulted in a list of false receipt numbers, which included details on the insurance licensee who completed the transaction and the name of the customer involved in the insurance transaction.
ICBC found that, for the 18-month period reviewed, the Licensee entered 50 false toll bridge receipt numbers when processing insurance transactions. The use of the false toll bridge receipt numbers resulted in the override of toll bridge debts and allowed ICBC Autoplan transactions to proceed without the toll bridge debt being collected.
In an interview with ICBC on September 30, 2015, the Licensee stated that she completed an average of 450 ICBC Autoplan transactions per month, acknowledging that with this many transactions, there was a chance of error. ICBC determined that in the 50 transactions conducted, none of the debts were cleared at the time the transaction was processed by the Licensee. Less than eight of the 50 toll bridge debts were cleared within five days after the insurance transaction, while the remainder were either never cleared, or cleared several weeks or months later.
Intended Decision Jacqueline Nicole Babcock LIC-173187C108280Rl I COM-2017-00138 June 28, 2017 Page 3of5
The Licensee acknowledged that she did not always sight receipts, and that sometimes customers had texted or verbally provided her with toll bridge receipt numbers. The Licensee denied knowingly entering false receipt numbers.
ANALYSIS Council noted that 50 customers had come to the Licensee to complete an ICBC Autoplan transaction and had provided false toll bridge receipt numbers. While noting that the Licensee processed a high number of insurance transactions each month, Council found that the likelihood of this occurring this many times without the Licensee's knowledge, was beyond the balance of probabilities.
Council noted that the ability to override the system to avoid paying a toll bridge debt was not well known to the general public and concluded that it was highly unlikely that 50 of the Licensee's clients would know about this and have an appropriate receipt number (two letters followed by five numbers) to provide the Licensee. In addition, the Licensee had a responsibility to sight the receipt as part of the insurance transaction. This does not appear to have occurred on 50 occasions.
Council determined that given the large number of false toll bridge receipt numbers, the Licensee intentionally entered false information into ICBC's system, or at the very least, willingly turned a blind eye to the process and entered false toll bridge receipts so as to facilitate ICBC Autoplan transactions.
Council acknowledges that insurance licensees face significant pressure from customers to complete insurance transactions in a timely manner. However, insurance licensees are also expected to carry on the business of insurance in a competent and trustworthy manner, in good faith, and in accordance with the usual practice of the business of insurance. In addition, an insurance licensee has a duty to an insurer to comply with the process established for completing an insurance transaction on behalf of that insurer. The Licensee's actions in entering false toll bridge receipt numbers breached that responsibility to ICBC.
As the Licensee failed to follow ICBC's procedure by overriding the toll bridge debt requirements, Council determined the Licensee's actions brought into question her trustworthiness, and her ability to act in good faith and in accordance with the usual practice of the business of insurance.
Intended Decision Jacqueline Nicole Babcock LIC-l 73187Cl08280Rl I COM-2017-00138 June 28, 2017 Page 4of5
Council determined the Licensee's conduct was a serious breach of her responsibilities and it is necessary to send a clear message to both the Licensee and the industry that such a serious breach of practice is unacceptable. Council concluded that a significant fine is appropriate in the circumstances.
INTENDED DECISION Pursuant to sections 231 and 23 6 of the Act, Council made an intended decision to fine the Licensee $5,000.00.
The Licensee is advised that should the intended decision become final, the fine will be due and payable within 90 days of the date of the order. In addition, failure to pay the fine within the 90 days will result in the automatic suspension of the Licensee's general insurance licence and the Licensee will not be permitted to complete any annual filing until such time as the fine is paid in full.
The intended decision will take effect on Julyl8, 2017, subject to the Licensee's right to request a hearing before Council pursuant to section 23 7 of the Act.
RIGHT TO A HEARING If the Licensee wishes to dispute Council's findings or its intended decision, the Licensee may have legal representation and present a case at a hearing before Council. Pursuant to section 23 7 (3) of the Act, to require Council to hold a hearing, the Licensee must give notice to Council by delivering to its office written notice of this intention by July 17, 2017. A hearing will then be scheduled for a date within a reasonable period of time from receipt of the notice. Please direct written notice to the attention of the Executive Director.
If the Licensee does not request a hearing by July 17, 2017, the intended decision of Council will take effect.
Even if this decision is accepted by the Licensee, pursuant to section 242(3) of the Act, the Financial Institutions Commission still has a right to appeal this decision of Council to the Financial Services Tribunal ("FST"). The Financial Institutions Commission has 30 days to file a Notice of Appeal, once Council's decision takes effect. For more information respecting appeals to the FST, please visit their website at fst.gov.bc.ca or contact them directly at:
Intended Decision Jacqueline Nicole Babcock LIC-l 73187Cl08280Rl I COM-2017-00138 June 28, 2017 Page 5of5
Financial Services Tribunal PO Box 9425 Stn Prov Govt Victoria, British Columbia V8W9Vl
Reception: 250-387-3464 Fax: 250-356-9923 Email: FinancialServicesTribunal@gov.bc.ca
Dated in Vancouver, British Columbia, on the 28th day of June, 2017. For the Insiye Council of British Columbia atier Executive Director 604-695-2001 gmatier@insurancecouncilofbc.com
GM/yw