CLHIA comments on FCAC's proposals on stakeholder engagement and the consultation framework for compliance and enforcement issuesRelease Date: 03/06/2015 Staff Reference: Ethan Kohn
March 6, 2015
Ms. Teresa Frick
Director, Compliance and Enforcement Branch
Financial Consumer Agency of Canada
427 Laurier Avenue West, 6th Floor
Ottawa, Ontario K1R 1B9
Dear Ms. Frick:
We are pleased to respond to FCAC’s proposals on stakeholder engagement and the consultation framework for compliance and enforcement issues.
Established in 1894, the CLHIA is a voluntary trade association that represents the collective interests of its member life and health insurers. Our members account for 99 per cent of the life and health insurance in force in Canada, and administer about two-thirds of Canada's pension plans. Life and health insurance companies contribute to the financial well-being of more than 27 million Canadians through products such as life insurance, annuities and supplementary health insurance. Policyholders and their beneficiaries receive $76.2 billion a year in benefits, or almost $1.5 billion a week, with over 90 per cent of benefits going to living policyholders.
To begin, let me note that we agree that stakeholder engagement promotes effective policy development. By hearing the views of all stakeholders, FCAC will be in a position to advance rules and guidance which address the needs of consumers, industry and other stakeholders in a balanced and practical fashion. By ensuring broad stakeholder involvement, FCAC will have the benefit of diverse viewpoints which can prevent unintended consequences flowing from incomplete information or failure to consider all aspects of a proposal. In short, a rigorous consultation framework ensures that all points of view are considered in light of full information. The other benefit of a stakeholder process is the potential for greater buy-in from stakeholders since their point of view will have been fully considered. For all these reasons, we are very supportive of the new framework which FCAC is looking to put in place.
In the document, you have asked specific targeted questions on which you are seeking input. We offer our views on several of these as follows:
- You have asked about constituents to be consulted and the means of gathering input and whether these should be expanded beyond what is listed in the discussion paper. You also ask whether we would participate in a consultation, if asked.
One of the main responsibilities of the CLHIA is to participate in both policy and technical discussions on behalf of our member companies with a view to promoting regulation that is pragmatic and workable; accordingly, we would always be interested in participating in an FCAC consultation whenever we feel that we have something to add to the conversation. In terms of constituents and methods of gathering input, we believe that the list of relevant stakeholders and consultation methods which you have developed is comprehensive. In particular, given that the market conduct of insurers is regulated by the provinces, we support the inclusion of provincial regulators on the list of relevant stakeholders. We would simply urge you to remain flexible to accommodate other stakeholders, where such participation is helpful.
- With respect to compliance consultations, we support the proposal of consulting on all initiatives having a regulatory impact, but consulting only on those administrative changes that could have a “real” impact on stakeholders, such as having to adopt new procedures or change current procedures.
- As far as timeframes for consultation are concerned, we believe that generally 45 calendar days is an appropriate timeframe, subject only to the caveat that this may need to be extended if the consultation takes place over summer or Christmas vacations. We would typically respond by e-mail, although regular mail is sometimes used.
- We support the intention to engage in follow-up discussions summarizing the submissions and resultant changes. The Office of the Superintendent of Financial Institutions has begun using this approach in the last couple of years and, as its stakeholder, we believe it is very useful. It would also be helpful if FCAC could provide its rationale for rejecting particular submissions, as this would provide added insight and transparency for stakeholders.
- Finally, we also support the establishment of stakeholder engagement sessions because these also promote transparency and predictability. We do not feel strongly about a preferred setting for these sessions, though face-to-face meetings (at least occasionally) could promote a better working relationship and understanding between FCAC and its constituents.
Thank you for providing us with the opportunity to comment on the proposed compliance framework. We appreciate the effort you have made to gather stakeholder input, and should you have any further questions, please do not hesitate to contact us.