In the Matter of The FINANCIAL INSTITUTIONS ACT (RSBC 1996, c.141) (the "Act")
and The INSURANCE COUNCIL OF BRITISH COLUMBIA ("Council")
and APRIL LYNN STEED (the "Licensee")
ORDER As Council made an intended decision on March 12, 2013, pursuant to sections 231 and 236 of the Act; and
As Council, in accordance with section 237 of the Act, provided the Licensee with written reasons and notice of the intended decision dated March 21, 2013; 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 $500.00. 2. A condition is imposed on the Licensee's life and accident and sickness insurance licence requiring that she pay the above-ordered fine no later than July 9, 2013. If the Licensee does not pay the ordered fine in full by this date, the Licensee's life and accident and sickness insurance licence is suspended as of July 10, 2013, without further action from Council and the Licensee will not be permitted to complete any annual filing until such time as the ordered fine is paid in full.
This order takes effect on the 9th day of April, 2013.
Chairperson, Insurance Council of British Columbia
C. David Porter, LL.B., FCIP, CRM
INTENDED DECISION of the INSURANCE COUNCIL OF BRITISH COLUMBIA ("Council")
respecting APRIL LYNN STEED (the "Licensee")
INTRODUCTION 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.
On March 12, 2013, Council considered an allegation that the Licensee failed to notify Council of the expiry of her errors and omissions ("E&O") insurance within five business days of the loss of coverage, in accordance with Council Rule 7(11).
At the conclusion of its meeting, Council determined that 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 23 6 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 Based on the information presented at its March 12, 2013 meeting, Council made the following findings of fact:
1. The Licensee was first licensed as a life and accident and sickness insurance agent ("life agent") on March 1, 2006. She is currently licensed and authorized to represent Foster Financial Services (the "Agency").
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2. The Licensee did not renew her E&O insurance, which expired on December 13, 2011.
3. The Licensee failed to notify Council of the termination of her E&O insurance. 4. The Licensee advised she was unaware that her E&O insurance had lapsed as the person at the Agency responsible for monitoring the renewal of licensees' E&O insurance had failed to forward the notification to her. The Licensee was therefore not aware that her E&O insurance was due for renewal.
5. The Licensee advised Council that she did not conduct any insurance activities during the time she was without E&O coverage as her position was that of an assistant in the Agency, which did not require her to engage in insurance activities that require a licence.
Council Rule 7(11) states: (11) Effective January 1, 2006, unless otherwise determined by Council a licensee: (a) must maintain or be covered by E&O insurance, which extends to all activities as a licensed insurance agent, salesperson or adjuster, with: (i) a minimum limit of$1,000,000.00 per claim; and (ii) a minimum aggregate limit of $2,000,000.00; (b) who is a direct employee of an insurer is exempt from subsection (a) where: (i) the licensee only sells the products of that insurer; and (ii) the licensee provides certification from the insurer that: (A) the licensee is an employee of the insurer; (B) the company accepts responsibility for the licensee's activities as a licensee; and (C) the company will respond to E&O claims against the licensee on the same basis as set out in subsection (a); (c) that is no longer insured as required under subsection (a) or (b) must: (i) notify Council within 5 business days; and (ii) immediately stop conducting any insurance activities; (d) will have the Jicence automatically suspended without Council taking any action, where the licensee remains uninsured for a period exceeding 30 calendar days; and (e) will have the licence suspended under subsection (d) automatically reinstated where: (i) the licensee obtains the required E&O insurance within 30 calendar days from the date of the suspension; and (ii) the licensee delivers to Council the required verification; otherwise the licence is terminated.
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ANALYSIS Council found the above-mentioned facts constituted a breach of Council Rule 7(11 )(c )(i), in that the Licensee failed to notify Council within five business days of ceasing to have E&O insurance. Council accepted that the Licensee did not conduct any insurance activities while she was without E&O insurance and, therefore, did not place any clients at risk. While accepting that the issue arose due to a breakdown in procedures within the Agency, the responsibility to meet the requirement in Council Rule 7(11) rests with the individual licensee. Council accepted that the Licensee's actions were unintentional and, as a result, determined a nominal fine to be appropriate in the circumstances.
In considering the appropriate disposition in this matter, Council noted that precedent for unintentional breaches of Council Rule 7(11 )( c) (i), as it relates to individual life agents, is a fine of $500.00. Council therefore determined that a fine in the amount of $500.00 was both reasonable and appropriate in these circumstances.
INTENDED DECISION Pursuant to sections 231 and 236 ofthe Act, Council made an intended decision to fine the Licensee $500.00.
The Licensee is advised that should the intended decision become final, the fine will be due and payable in full within 90 days of the date of the order.
The intended decision will take effect on April9, 2013, 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 237(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 AprilS, 2013. 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 April 8, 2013, the intended decision of Council will take effect.
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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 www.fst.gov.bc.ca or contact them directly at:
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 21st day of March, 2013.
AH/cp