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FSCO File No. AB044-2007 Superintendent of Financial Serv ices Regarding a hearing concerning the suspension or revocation of the life insurance age nt licence of Roland Gebhard
AND the Insurance Act, R.S.O. 1990, c.1 .8, as amended, particula rly Part XIV
DECISION Introduction : Pursuant to a Notice of Hearing dated September 26, 2007, an Advisory Board was duly appointed under section 393 (9) of the Act. The hearing was conducted on January 30 and 31, 2008.
The allegations are set out in Schedule "1" as attached. The report of the Advisory Board is attached. Findings of Fact : Mr. Gebha rd represented himself at the heari ng . He chose not to testify at the hearing or to call any witnesses on his beha lf. There is case law that entitled the Advisory Board to draw a negative inference from this failure to testify once a prima facie case had been established agains t him. The Advisory Board stated "A lthough Gebhard had no initial necessity to testify , once the case was made against him the onus of proof shifted so it would have been prudent for him to consider coming forward to testify ... " This negative infe rence was the addi tional factor described by the Adviso ry Board when it stated ''Taking this additional factor into consideration, the Board finds the allegations against Gebhard proven on the basis of clear, convincing and cogent evidence".
However, subsequent in its report, the Advisory Board only makes reference to untrustworthiness (the second allegation ), particularly in its discussion of penalty. Accordingly , I am granting the benefit of doubt to Mr. Gebhard and am only adopting the finding of fact with
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respect to the second allegation made against Mr. Gebhard. since it is unclear whether the Advisory Board also found the first and third allegations to be established . No further allegations were made at the hearing.
Recommendation of the Advisory Board The Advisory Board recommended that Mr. Gebhard's licence be suspended for a period of six months.
The Advisory Boa rd considered mitigating factors . These included the isolated nature of Mr. Gebhard's misconduct. an otherwise clean record, and the absen ce of any substantial monetary gain .
Decision : The Advisory Board has found the allegation of untrustworth iness against Mr. Gebhard to be established.
I note that Mr. Gebhard admitted alteration of company production reports, but offered no explanation for his actions. If it was a correct ion of an error, Mr. Gebhard could have so stated. The Adv iso ry Board noted that "Gebhard profited only in a small way from the changes made to the agent 's weekly production repo rts ".
I note that Mr. Gebhard's action d id not place clients at risk. but did cause problems associated with a "not sufficient funds" cheque for a client. Mr. Gebhard's actions did not result in the creation of fictitious policie s for which the insurer paid commission, but rather had the effect of creating the appearan ce tha t he had produced business that he had not and to rece ive comm iss ions for such bus iness. In this regard , the nature of his untrustworthy actions was less egregious than someone placing clie nts at risk or creating fict it ious policies.
Had the first and third allegations about suitabi lit y been established, one of the fundamental requirements to hold a licence wou ld not be mel. Accordingly, in such a circumstance , Advisory Boards have frequently recommended that the agen t' s licence be rev oked . Wh ile this wo uld not be a bar aga inst ever aga in holding a licence as an insurance agent, the li cence applicant would have to satisfy the Superintendent that he or she has reformed and is now a sui table
person.
While I believe that a period of suspension is required, I believe that a six month period is excessive in the circumstances. Since J have previously noted that I am prepared to give Mr. Gebhard the benefit of the doubt with respect to the established allegations , I accordingly feel that the penalty should be reduced to reflect one established allega t io n rather than three and the fact that allegations re lated to sui lab ili ty have been exc luded.
I believe that a period of suspension of two months is consistent with other circumstances where there was not a material harm to either clients or an insurance company.
Accord ing ly I hereby order thai Mr. Roiand Gebhard's licence as a life insura nce agen t be suspended for a period of two months commen cing June 1, 2008.
Dated at Toronto, this 28th day of Apr il 2008. Grant Swanson Executive Director, Licensing and Market Conduct Division by delegated authority from the Superintendent of Financial Services
SCHEDULE 1 The allegations referred to in the Notice of Opportunity for a Hearing are as follows:
1. Mr. Roland E. Gebhard ("Gebhard") has violated the condit ions for the ma intenance of his licence according to sect ion 8 of Regulation 347/04 ("the regulation") in that he failed to demonstrate that he is of good character and reputation and is suitable to be licensed, as required in section 4 of the regulation .
2. Mr. Roland E. Gebhard has violated the conditions for continued licensing in section B(d) of the regulation in that he has demonstrated incompetence or untrustworthiness to transact the insurance agency business for which the licence has been granted.
3. By engaging in the conduct noted above, Gebhard has demonstrated that he is not a suitable person to hold a life insurance licence.
4. Such further and other allegations as counsel for FSCO may advise.