FSCA shed some light on the issue of life settlement

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The Financial Services Consumer Alliance’s purpose is to promote and defend the rights of consumers in the financial industry. This organization will be launched and be fully operational by September 2014. It’s CEO, Richard Proteau, in an interview soon to be published stated: “this organization will be unlike any others. First, it will be a social organization intent on leveraging every single social media to promote the rights of consumers in the financial industry… Our tools to achieve our goals come from my 20+ years experience in this industry… such tools are unique and innovative and will forever change the face of this industry such as the Financial Services National Database of Consumer’s Complaints which will allow us to identify past and future problems through data mining of registered complaints made by consumers, allowing us to decide on the right legal action to address the issue…

 

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11 comments

  1. Richard, I think this is a great proposal which you should be taking up with the next Ontario government. It is still unclear exactly what the terms “hypothecation, pledge or assignment” mean in the context of sec.115 of the Ontario Insurance which still has not been repealed.
    As we dealing with a CRIMINAL offence and a $100,000 FINE for a First Offence, I think that if the next Ontario government only wants to allow Third Party Living Benefit loans, they should IMMEDIATELY get FSCO to PROMULGATE that such loans are NOW EXEMPT from Sec.115 until Life Settlement Regulations are put in place down the road.
    Back in 1996 Canadian Life Line Ltd. in Nova Scotia presented a Private Bill Pr.39 to the Ontario Legislature to be EXEMPTED from sec. 115 and was turned down by the Standing Committee on Private Bills, because the Ontario PC government, felt that this was a PUBLIC POLICY issue. Well if you think it is a PUBLIC POLICY issue, then why weren’t you raising it in Question Period along with the Gas Plant questions??
    By ontario lifeline

  2. JUERGEN BECK
    Retired Insurance Brokerage CEO

    It has been said :
    You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.
    Honesty a cornerstone of every transaction , be it financial , be it personal…is a must in ongoing lasting relationships…when words are twisted to deny what is due , collapse will happen soon or later….Insurers who maintain Integrity will win , those who think they can fool people with fancy slogans/words will fall by the wayside….don’t matter how big they are.

  3. Ontario Lifeline
    Principal

    Richard, this is a great topic for discussing the semantics of a life settlement and whether they should be legalized and regulated throughout Canada, using the lead of the late Jim Flaherty when he was Ontario Finance Minister back in 2000 when he introduced Schedule G of the Ontario Red Tape Reduction Act.
    However what is far more relevant to the terminally-ill policyholders in Ontario is how many of the life agents are aware of the non-contractual Living Benefits offered by their insurer?
    And how many life insurers are aware and comply with the 1993 OIC Guidelines on Living Benefits which states that a Living Benefit should always be 50% of the Face IRRESPECTIVE of the size of the policy with NO MAXIMUM CAP.
    Recently we were approached via http://www.life-funding.com by a woman whose family member now has Stage 4 cancer and was looking for a loan as they do not have Disability Insurance. They have a $250K T100 with Empire Life and a $750K T100 with Canada Life and I advised her to apply for a Living Benefit with each insurer. She has now informed me that each life insurer will only give a $50K Living Benefit!!
    What is their problem ?? Can they not afford to lend up to 50% and charge a reasonable rate of interest such as 5% pa?
    And where is FSCO and the current Ontario government?
    I have just made available on my Nova Scotia based Canadian Life Line LI Page the entire UNPUBLISHED 1997 Ontario Ministry of Health Feasibility Study into establishing a NON-PROFIT Life Settlement Corporation and I suggest all members of ADVOCIS especially their Board should download the 20 page Study and see why there was a need for this back in 1997 and why there is still a need for this, not only in Ontario but throughout Canada.
    If the next Ontario government is going to carry on running the LCBO and the Casinos, then they should also assist the terminally-ill and seniors to access the equity in their life policies, if their own insurer is unwilling to do so.

  4. Richard Proteau
    CEO and Founder Financial Services Consumer Alliance

    On T100, it is clear the expectation of the insurer is that a policyowner with stage 4 cancer will not be able to continue working. This person will barely be able to pay for medication and the expectation of the insurer is that this person will find herself unable to pay the premium of the T100 with no other option to lapsing. On this case alone, the total profit for the insurer is close to $1 million dollars. Anybody can see the conflict of interest…
    What will be interesting to see is if for once advisor can act independently from insurers and decide independently about what is right. However having seen a communication from a so called independent organization stating in writing that they will never adopt a policy that goes against the wishes of insurers, it is clear that advisors are not independent and are lying to the public. This is another thing that FSCA will look at. If you state that you are independent, you better be or this is a false misrepresentation.

  5. Ontario Lifeline
    Principal

    Richard, in this particular case both insurers have agreed to offer a $50K Living Benefit which will also be used to pay the future premiums to keep it IN FORCE. So they are not deliberately trying to let the policy lapse but are either unaware or unwilling to comply with the 1993 OIC Guidelines (and they are only Guidelines) to give the policyholder up to 50% of the Face without any CAP.
    If the insurers are unwilling to increase the Living Benefit, then Ontario Life Line is willing to facilitate a Third Party “reverse mortgage” loan with an interest rate of 8% pa. In this case we will be acting on behalf of the policyholder and compensated for our time and effort by the policyholder when the loan closes.

  6. Richard Proteau
    CEO and Founder Financial Services Consumer Alliance

    Daniel, first let’s not make excuses here. It’s the duty of the insurer to know about the guidelines. If an advisor do something wrong, ignorance is not an excuse. The same applies to insurers. As far as I am concerned, from a consumer perspective the insurers have lost their opportunity for offering this type of benefit. Now it is the turn to private parties like Ontario Life Line. You can do a better job… and this is what the consumer wants.

  7. Ontario Lifeline
    Principal

    Richard, as I said before they are Guidelines and if the life insurers are unwilling to be more flexible, then yes Ontario Lifeline is willing to step in and find the best third party alternative legally available for the policyholder.
    It may be that the policyholder is 85 and healthy and has no longer any need for the life insurance and in such a case he should be allowed to deal with a local Ontario buyer willing to purchase his policy rather than being forced to contact Quebec or the US to sell his policy.
    This morning I went to meet Christine Elliott the MPP for Whitby and the widow of the late Jim Flaherty and asked her to perpetuate his legacy by getting FSCO to PROMULGATE updated Life Settlement Regulations in place of the DRAFT Viatical Settlement Regulations sent out by FSCO for Stakeholder Comments in July 2001.

  8. Richard Proteau
    CEO and Founder Financial Services Consumer Alliance

    Daniel I understand what you are saying but I am talking from a consumer perspective. Insurers blew it. They chose to ignore 1993 OIC guidelines and to profit from desperate people. They had 20 years to do the right thing. Why should consumers give them a second chance? What have they done to deserve such level of trust?As far as I am concerned insurers are now only part of the problem. They are not part of the solution. Companies like yours are the only solution to allow access to living benefits settlement on a fair basis for the terminally ill. For viatical settlements, and this means a transfer of ownership to a third party through selling of the policy, I can’t state yet the position of FSCA. We are opened to the idea subject to a highly regulated environment. So there is a two step process. First make available third party living benefits to the terminally ill. This is the pressing issue. When this is done, I think this will give credibility to these third parties which will allow moving the discussion to viatical settlements.

  9. Ontario Lifeline
    Principal

    Richard, I think this is a great proposal which you should be taking up with the next Ontario government. It is still unclear exactly what the terms “hypothecation, pledge or assignment” mean in the context of sec.115 of the Ontario Insurance Act which still has not been repealed.
    As we dealing with a CRIMINAL offence and a $100,000 FINE for a First Offence, I think that if the next Ontario government only wants to initially allow Third Party Living Benefit loans, they should IMMEDIATELY get FSCO to PROMULGATE that such loans are NOW EXEMPT from Sec.115 until Life Settlement Regulations are put in place down the road.
    Back in 1996 Canadian Life Line Ltd. in Nova Scotia presented a Private Bill Pr.39 to the Ontario Legislature to be EXEMPTED from sec. 115 and was turned down by the Standing Committee on Private Bills, because the Ontario PC government, felt that this was a PUBLIC POLICY issue.
    Well if you still think it is a PUBLIC POLICY issue, then why weren’t you raising it in Question Period along with the Gas Plant questions??

  10. would appear to me that more CONSOLIDATED efforts should be considered with the retaining of a professional PR/Lobby organization rather then continued somewhat self serving commentaries such as above.

    • Hi Leonard, I am a bit surprised by your comments… This is a blog by the way and the purpose of a blog is to provide commentaries… I would love to talk to you regarding life settlements and what happened at Manulife. As for a lobby firm, do you know how much this cost? Unlike big insurers who can pay big lobbyists who have the ear of the politicians, consumers only have word of mouth…anyway if you want to talk to me send me an email at richard_proteau@yahoo.com. regards Richard

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