Advocis granted leave to intervene in landmark case
March 15, 2006, Toronto, ON – In a major victory for financial advisors, Advocis successfully obtained leave to intervene in the Supreme Court of Canada case Canadian Western Bank v. Alberta regarding provincial jurisdiction to require mandatory licensing for individuals selling credit insurance products. Specifically, the issue is whether a federally chartered bank must obtain a license under the Alberta Insurance Act in order to promote certain insurance products in the Province. The case will be heard in Ottawa on April 11.
�The Court’s decision to grant leave to Advocis strongly affirms Advocis� unique and valuable perspective on the issue of whether financial institutions must license their employees who sell creditor insurance,� said Advocis Chair Gary McLeod, CLU. �It solidifies our status as the voice of Canada�s financial advisors.�
�Advocis is the only industry association to have sought � and be granted leave to intervene. We are the only non-governmental party to put forward the views of advisors and consumers,� said McLeod. �It is fitting that in our centennial year Advocis will play a key role in a landmark case that goes to the root of how insurance is regulated.�
The Court grants leave to intervene to interested parties who can demonstrate their unique perspective and relevance to the proceedings and show they would be impacted by the outcome.
In 2001 the Alberta Government issued a regulation requiring any individual who sells any type of insurance to be licensed by the Insurance Council. This would include not only credit insurance but travel insurance and even some extended warranties. The banks immediately challenged the regulation arguing that the Province does not have jurisdiction to regulate banks, as the latter are regulated federally under the Bank Act. Moreover, the banks argue, among other things, that the selling of credit insurance is incidental to the business of banking and is not a core insurance product but rather a risk management tool.
The banks failed to persuade the lower court and the Alberta Court of Appeal, and were granted leave to appeal to the Supreme Court of Canada.
The federal government and five provincial governments (Quebec, Saskatchewan, Ontario, New Brunswick and BC) are intervening. Governments are automatically given the right to intervene whenever a question of constitutional law is raised. The federal government is intervening in support of the banks� argument that federal jurisdiction prevails; the provincial governments are intervening in support of the Province. In addition, the non-bank insurance companies have been granted standing to intervene.
Legal materials must be filed by March 31. Advocis will be working very closely with its legal representatives to prepare and file legal arguments with the Court in the coming weeks.
�This is fundamentally an issue of fairness – everyone should be bound by the same rules. Consistent with our strategy for a single, common regulatory framework that applies to everyone, we believe that all those who sell insurance products should be properly licensed,� said McLeod. �Advocis will be there – in the highest court of the land – to ensure a level playing field for professional advisors.�
Advocis promotes a regulatory framework based on the important role of provincial licensing bodies overseeing financial product distribution and federal regulation of financial product development. Separate governance of financial planning is an element of the model. Advocis members must be licensed to distribute financial products. They are supported by personal errors and omission insurance and voluntarily subscribe to best practice guidelines and a Code of Professional Conduct.
For more information concerning applications for motions to intervene in a Supreme Court of Canada case, please visit: http://www.scc-csc.gc.ca/actandrules/rules2002/rules2002_e.asp.
Advocis, The Financial Advisors Association of Canada, is the oldest and largest voluntary professional membership association of financial advisors. With more than 12,000 advisors in 49 chapters across Canada, Advocis members provide financial and product advice to millions of Canadians across a variety of distinct areas, including: estate and retirement planning, wealth management, risk management, and tax planning. Members adhere to a strict professional Code of Professional Conduct, subscribe to standards of best practice, meet ongoing continuing education requirements, maintain appropriate levels of professional liability insurance and are committed to putting their client interests first. The Association�s website is www.advocis.ca.