The Act Respecting the Distribution of Financial Products and Services seeks to oversee and regulate the distribution of financial products and services, including general insurance, in Québec. More than 17 years after the Act came into force, we believe it needs to be amended to keep up with evolving brokerage practices. Technology is changing the way business is done. The investments required in this area, as well as in training, marketing and advertising, among other matters, are taking on greater importance.
The 20% shareholding rule limits brokerage firms in their ability to attract the greater involvement and resources that insurers could put at their disposal, if they had the choice. The current situation prevents brokerage firms from competing on an equal footing with direct insurers, which have access to far greater means and which invest heavily in technology as well as in marketing to meet consumers’ needs. Québec is the only Canadian province where such restrictions apply.
In our current global economy, the limitation would in no way prevent the emergence of new, non-traditional competitors from taking stakes in firms and thereby creating new market competition.
We therefore seek to modernize the legislative provisions so that brokerage firms can benefit from a better selection of business models. This is the position we are putting forward during the consultations regarding Bill 150.
Our goal is to strengthen brokerage firms. We believe the best way to do this is to benefit, if they so choose, from the resources that an insurer can put at their disposal while maintaining their basic role as advisors to their clients as brokers. Meeting this goal would enable firms that wish to do so to offer products from a primary insurer and/or several insurers, regardless of the line of business. This naturally would go together with clear and unequivocal disclosure from the broker.
This is essential to the profession’s development and the sustainability of brokerage firms in all regions of Québec.