Companion Guide Maintenance of Registration Firm Independent Partnership The Autorité des marchés financiers (the AMF or the Authority ) has prepared this companion guide to help you answer the new questions of the Maintenance of Registration form for firms and independent partnerships. For more information, please feel free to contact our Information Centre at 1-877-525-0337. General instructions To help you disclose your business relationships, consult the Managing Business Relationships companion guide. You will need to fill out the Maintenance of Registration form first before completing the Manage Business Relationships form. If you use E-Services, you can print a copy of the form before submitting it. September 24, 2018
GENERAL DECLARATION Q1- Does the registrant receive or collect funds on behalf of others (e.g., for an insurer or a client)? A registrant within the meaning of the Act respecting the distribution of financial products and services is a firm, independent partnership or independent representative. Funds collected on behalf of others are those that the registrant receives or cashes on behalf of others in the course of its activities, e.g., for the payment of a premium to an insurer, a repayment to an insured or the payment of a claim. This does not relate to, for example, a cheque issued in the name of an insurer that is given to the registrant before being sent to the insurer. The registrant must hold a separate account at a financial institution in which all funds received or collected on behalf of others must be deposited immediately. Q2- Does the registrant have one or more separate or in-trust accounts? A separate account means a separate account opened at a financial institution (authorized to receive deposits in Canada) and in which the registrant must deposit all amounts that it receives or collects on behalf of others. This account is separate from the account(s) used for the registrant s own regular business transactions so that the funds held on behalf of others are not commingled with its own assets. The registrant must disclose its separate account(s) to the AMF. Q3- Does the registrant hold one or more loans with one or more insurers? This question relates to loans made by an insurer. Q4- Does the registrant hold one or more loans with one or more registrants? This question relates to loans made by a firm, independent partnership or independent representative. 2
Q5- Does the registrant have commission sharing agreements with one or more businesses registered with the AMF? This question relates to any business registered with the AMF under the Act respecting the distribution of financial products and services or the Securities Act (as a mutual fund or scholarship plan dealer). Sharing of commissions takes place when a registrant splits or divides remuneration and gives part of it to another person authorized under the Act respecting the distribution of financial products and services. There is a sharing of commissions when a product is sold or a service provided by only one registrant, who assumes responsibility toward the client, and another registrant receives part of the remuneration for the transaction and agrees to share it. Moreover, when two registrants sell a product or provide a service jointly to a client, they are both responsible for the services they provided to this client. Consequently, both are entitled to receive a commission. In this case, there is no sharing of a commission. You must disclose agreements under which you share commissions, but also under which you receive a share of commissions. Agreements must be disclosed, but not their terms and conditions. Q6- Does the registrant have agreements with client referral agents or did it pay money to such agents during the year ended last December 31? A client referral is defined as the act, for a natural person, of referring a client to a representative who holds a certificate or a person registered under the Act respecting the distribution of financial products and services. Q7- Does the registrant have agreements with one or more insurers for server and/or Internet site hosting, administration services, equipment supply, premises leasing or staff loans? This question relates to agreements reached with an insurer whereby the insurer operates services at its own expense, for the benefit of the registrant. This type of agreement allows the registrant to derive a benefit free of charge. This question does not relate to, for example, services where the registrant pays monthly administration fees. 3
Q8- Does the registrant have agreements with one or more registrants for server and/or Internet site hosting, administration services, equipment supply, premises leasing or staff loans? This question relates only to agreements entered into with a firm, independent partnership or independent representative. This type of agreement allows the registrant to derive a benefit free of charge. This question does not relate to, for example, services where the registrant pays monthly administration fees. GENERAL DECLARATION (continued) Q1- Does the registrant carry out paid activities (whether related or not to financial services) other than those provided for under its registration? This question relates to the other paid activities that a firm or independent partnership may carry out (e.g., a firm leases premises in the building that it owns and in which its offices are located). It is important to distinguish the activities of the registrant or legal person from those of individuals. For example, the activities of a maintenance services company belonging to one of the registrant s owners or partners are not considered to be activities of the firm. However, maintenance service activities offered by the registrant, on top of the activities provided for under its registration, are covered. Q2- Do uncertified employees of the registrant carry out customer service? For example, respond to general inquiries about existing products or contracts or make administrative changes. In order to be authorized to advise consumers and offer financial products and services, an individual must hold a right to practise (certificate). The purpose of this question is to characterize the role of administrative staff. It thus concerns activities other than those reserved for certified representatives, including responding to general inquiries without giving advice about existing insurance products or contracts. 4
Q3- Does the registrant have pre-hire screening measures for uncertified employees? Pre-hire screening measures include background checks to validate information provided by candidates, their integrity and solvency, and any other verifications to ensure candidates are honest, e.g., criminal, financial and insolvency background checks. Q4- Does the registrant hold the following insurance? There may be more than one answer. Cyber risk includes issues and risks related to the use of technology and social media, e.g., hacking, data theft, phishing/ransomware attacks. Q5- Does the registrant use compliance audit software or does it deal with businesses that offer such services? Compliance audit software is software used to automate any or all tasks carried out to ensure transaction compliance ( RegTech ). Q6- Does the registrant have policies for the following? This question relates to any written document (a policy, procedure, guide, instruction or guideline) that specifies the registrant s orientations to be applied by its staff. If the year of the latest update to the registrant s policies precedes the earliest date available in E-Services, please select that date. Q7- Does the registrant have a business continuity plan? A business continuity plan is a written document that sets out the actions required to ensure the continuity and resumption of the registrant s activities following an incident (e.g., failure of the registrant s computer systems, fire or flooding in its premises). In some cases, the plan may also provide for measures to take in the event the registrant s representative(s) become(s) disabled or incapacitated. 5
Q8- Does the registrant charge its clients policy fees, trading fees, professional fees, compensation or administrative fees (any fees other than premiums)? This question relates to fees that the registrant charges consumers for its services, other than those determined by the insurer, including file opening fees. Compensation is a remuneration or payment. Q9- Does the registrant have clients who no longer have a home address in Québec? This question relates to the registrant s current clients who no longer have a home address in Québec and who currently reside in a jurisdiction where the registrant is not authorized to pursue activities. Q10- Does the registrant have partnerships with the following businesses? This question is intended to specify the type of unregistered businesses with which the registrant has partnerships or business relationships that are directly related to its insurance activities, excluding any administrative or business management element, and that have not been disclosed in other parts of the form. DECLARATION PERTAINING TO DAMAGE INSURANCE Q1- Did the registrant sell damage insurance products in Québec during the year ended last December 31? If so, please indicate the business volume placed with insurers for which the registrant sold products (you must provide information only for insurers representing at least 10% of the registrant s business volume in Québec by type of product). Please answer to the best of your ability. The list of insurers is available in the public register on our website at https://lautorite.qc.ca/en/general-public/registers/. 6
Q2- In general, from how many insurers does the registrant (through its representatives) request quotes before offering product(s) to its clients? Please indicate the average number of insurers from which the registrant requests quotes before offering product(s) to its clients. Q3- In general, from how many insurers does the registrant (through its representatives) select products to present to its clients? Please enter the average number of insurers whose products the registrant presents to its clients. Q4- Is the registrant a member of a banner? A banner is the designation under which a business carries on its activities. A banner is any name, mark, symbol or sign belonging to a group, network or association of firms or independent partnerships. Q5- Does the registrant act as a wholesaler? Damage insurance wholesalers are businesses that pursue brokerage and underwriting activities concurrently or separately. Q6- Does the registrant use the services of wholesalers? Please refer to the above definition. 7
DECLARATION PERTAINING TO INSURANCE OF PERSONS Q1- Does the registrant act as general agent? General agent means a registrant to which an insurer has delegated certain tasks and which acts as an intermediary between that insurer and other registrants. This includes general agents, affiliated general agents and any other industry title that meets the above definition. Annual premium volume in individual insurance of persons for the registrant s general agent activities The AMF wants to know the premium volume written by the registrant in its role as a general agent. To answer this question, a general agent that also has attached representatives must exclude premiums written by them Q2- Does the registrant have direct distribution agreements with general agents? The AMF wants to know if the firm has entered into an agreement to use the services of a general agent. Q3- Indicate volume of premiums sold in Québec for the year ended last December 31. Please answer to the best of your ability. Living benefits include critical illness, disability and accident and sickness products. Death benefits refer to life insurance products, while annuity products relate to segregated funds, in particular. 8
DECLARATION PERTAINING TO GROUP INSURANCE OF PERSONS Q1- Does the registrant act as general agent? General agent means a registrant to which an insurer has delegated certain tasks and which acts as an intermediary between that insurer and other registrants. This includes general agents, affiliated general agents and any other industry title that meets the above definition. Annual premium volume in group insurance of persons, including group annuities, for the registrant s general agent activities The AMF wants to know the premium volume written by the registrant in its role as a general agent, i.e., in its role as an intermediary between the insurer and another registrant (independent representative, firm or independent partnership). To answer this question, a general agent that also has attached representatives must exclude premiums written by them, as these premiums were not written as part of its role as an intermediary between another registrant and an insurer Q2- Does the registrant have direct distribution agreements with general agents? The AMF wants to know if the firm has entered into an agreement to use the services of a general agent. Q3- Indicate volume of premiums sold for the year ended last December 31. Please answer to the best of your ability. Q4- Does the registrant carry out activities as a program administrator (TPA)? This question is intended to help the AMF better understand the market. A third-party administrator is a business specializing in group benefit programs, whether insurance, annuities or supplemental pension plans. 9
Q5- Does the registrant carry out activities as a third-party payer (TPP)? This question is intended to help the AMF better understand the market. A third-party payer is a business that provides premium billing administration services to one or more insurers and can also administer the payment of claims. Q6- Does the registrant have a procedure to help representatives draft proper mandates before setting up group plans? As part of its activities, the registrant must ensure that representatives send certain written information, including the nature and scope of their mandates and a needs analysis. 10