Each industry needs to practice a code of ethics and insurance and financial planning is no exception. Of course, the hope is always that there will be self-regulation. To some extent, that has happened. Advocis, Financial Planners Standards Council (CFP), and The Independent Financial Brokers of Canada (IFBC) have helped to keep an ethical awareness in the industry. All of these associations deal primarily with increased education, but with that, education also comes an increased awareness of ethical requirements.
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The primary concern when regulation is considered is consumer protection. The truly competent agent and financial planner is not the problem. Rather it is the person who professes to have education or training that does not actually exist.
Other reasons for regulating the financial planning industry:
A. To specifically state what designations or training must exist before a person can claim to be a financial planner;
B. To give the industry a sense of professionalism and high reputation;
C. To prevent duplication of services, inconsistent services or incomplete services.
The primary concern when regulation is considered is consumer protection.
Pro-Seminars International has provided as a resource for our readers, a typical Statement of Principles and Code of Ethics adapted by the IFBC and Advocis.
The Independent Financial Brokers of Canada (IFBC)
Statement of Principles of Independent Financial Brokers of Canada
The Independent Financial Brokers of Canada is an Association created to represent licensed professional financial brokers and to provide a forum for them to develop opinions, recommendations and programs.
What the Independent Financial Brokers of Canada stands for:
1. The Independent Financial Brokers supports a neutral law controlling differing systems of distribution, excluding none.
2. The Independent Financial Brokers seeks a regime in which members of all distribution systems are licensed and subject to licensing controls.
3. The Independent Financial Brokers affirms that its members are able to undertake any other occupation, when necessary, within the requirements of the licenses held.
4. Within the limits allowed by law, members of the Independent Financial Brokers are required to maintain an arm's length relationship with all insurers with whom they are contracted.
5. The Independent Financial Brokers supports improved levels of education for all agents, and particularly, expects its members to be thoroughly trained and knowledgeable in insurance.
6. The Independent Financial Brokers believes that all life brokers in Canada should be subject to a Code of Ethics.
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7. The Independent Financial Brokers supports the promotion and preservation of the common and specific interest of Association members as a professional body with full support for the principle of freedom in their business operations.
8. The Independent Financial Brokers seeks to foster a co-operative relationship among the Association, the public, the provincial authorities and all other organizations associated with life insurance and financial planning in order to contribute to the successful development and continuation of high standards in the life insurance industry in Canada.
Code of Ethics for Independent Financial Brokers of Canada
We, as an Association, are proud to introduce our own Code of Ethics. You may note numerous similarities between the proposed Ontario Code of Ethics and ours, but they are not the same, as ours will apply to all Independent Financial Brokers of Canada members across Canada.
This Code will hopefully serve as a guide to help get our members through difficult situations that they might face. Any broker who endorses the principles of this
Association, and lives by this Code, can expect the full support of this Association in any difficulties he or she may face with the regulators or companies.
The Code is intended to be simple, explicit and workable. Brokers who cannot abide by it are asked not to join, or will be asked to leave.
Duty of Care - Before giving advice or making recommendations, a broker shall make a diligent effort to learn the client’s needs, objectives and circumstances.
A broker shall place the interest of his/her client ahead of all other interests.
Confidentiality - Client and policy information may not be disclosed to any individual or company without the express written permission of the client.
Disclosure - A broker must disclose to a client all fees, premiums and costs associated with a proposed transaction. When recommending an insurance policy or course of action to a client, a broker must disclose all the relevant facts, considerations and risks reasonably available to the broker necessary for an informed decision. This disclosure should be in writing, and be receipted by the client.
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A broker must advise a client, in writing, if an issued policy is materially different than the policy applied for.
A broker must deliver all policies, amendments and other documents in a timely manner.
A broker must disclose to a prospective buyer of life insurance all conflicts of interest associated with a recommendation.
Behaviour - A broker may not misrepresent his/her education, qualifications or experience.
A broker may not be misleading as to the terms, costs, benefits or risks of any proposed course of action.
A broker may not recommend the replacement of any insurance policy unless he/she believes that such a replacement is in the best interest of the client.
A broker may not knowingly submit information on an application for insurance to an insurer that is inaccurate or misleading.
A broker may not engage in behaviour that is likely to be detrimental to the public professional image of insurance brokers.
A broker must actively represent, by contract, two or more insurance companies, and may not have an exclusive contract with any company.
The Financial Advisors Association of Canada (Advocis)
An ADVOCIS member shall offer and provide services with integrity.
An ADVOCIS member shall provide services competently.
An ADVOCIS member shall provide services in a diligent matter.
An ADVOCIS member shall not disclose any confidential information without expressed consent.
An ADVOCIS member shall strive to provide services that meet a client’s best interests.
An ADVOCIS member shall disclose any conflict of interest in providing services.
An ADVOCIS member shall reflect positively upon all other ADVOCIS members.
An ADVOCIS member shall respect and protect the privacy of others.
An ADVOCIS member shall respect the spirit and the letter of the law.
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