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The Financial Services Regulatory Authority of Ontario has issued a compliance order asking Calgary-based Greatway Financial to revise its training regime after finding it could result in unfair or deceptive acts by agents when selling insurance products to clients.Graeme Roy/The Canadian Press

Ontario’s insurance regulator is ordering Greatway Financial Inc. to retrain its insurance advisers and alert consumers they may have been misled or received inaccurate information when purchasing universal life insurance policies.

The Financial Services Regulatory Authority of Ontario (FSRA) has issued a compliance order asking Calgary-based Greatway Financial to revise its training regime after finding it could result in unfair or deceptive acts by agents when selling insurance products to clients. In addition, Greatway must mail letters to all its Ontario customers of universal life policies by Jan. 31, providing accurate information about the company’s insurance policies. The regulator said the information will help assist customers to decide whether the product they were sold is suitable for their needs.

“It is vital consumers receive information regarding life insurance policies which is accurate and appropriate,” FSRA’s director of litigation and enforcement, Elissa Sinha, said in a statement. “This compliance order ensures that Greatway trains its agents to do so.”

Greatway Financial consented to the order and agreed to have all advisers complete its revised training by March 31, 2023.

“While we are confident in the quality of our existing training materials, we are happy to refresh parts of it in order to resolve matters with FSRA,” chief compliance officer Ray Burgher said in an e-mail to The Globe and Mail.

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Greatway Financial has a network of 3,490 life and health insurance advisers across Canada, many of whom work part-time. As a managing general agency (MGA), Greatway acts as an intermediary between its distribution network and Canadian insurance companies to sell insurance products.

Approximately 92 per cent of Greatway’s $42.8-million gross income for 2020 came from the sale of permanent life insurance products, according to FSRA, of which 99 per cent was from the sale of universal life insurance products.

Universal life insurance typically allows consumers to pay a fixed premium for a specific amount of death benefit, as well as a portion to be placed in a savings cash account.

During a broader industry review, FSRA found the only required product training for Greatway advisers was on universal life policies. All other training on other product types was optional, FSRA said in its review.

FSRA also found the training program taught agents to sell Greatway’s universal life product to all consumers regardless of their financial circumstances, to misrepresent the universal life policy as a savings strategy rather than an insurance product, and to avoid communicating important risks and characteristics of the product.

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Agents in training were prompted to “not focus on life insurance, not mention the insurance amount, remove the insurance mindset and have the client focus on savings/investments,” FSRA said.

“These misleading statements may reasonably lead consumers to believe they are saving or investing money in a financial product only and not purchasing a life insurance policy,” FSRA executive vice-president of market conduct, Huston Loke, said in an interview. “Insurance exists to protect individuals, their families and their businesses, so when an insurance policy is sold and the information is misleading or harmful, we believe that can really have an impact on the customer and that needs to be corrected.”

Greatway’s compliance order follows an industry-wide review on MGAs by several Canadian regulators. MGA advisers – also referred to as agents by regulators – solicit insurance applications from consumers and submit them to insurance companies that have been contracted by the MGA.

Between December, 2021, and June, 2022, Canadian regulators conducted a joint review on three MGAs: Greatway Financial, Experior Financial Group Inc. and World Financial Group Insurance Agency of Canada Inc. During that time, regulators found several areas of concern, including compensation models, training programs, product suitability and oversight of advisers.

At the same time, FSRA had a review of life and health insurance advisers in Ontario, including those at Greatway.

Sold as an ”insured retirement plan or IRP,” Greatway’s universal life product – manufactured by ivari insurance – allows consumers to obtain life insurance while supplementing their retirement income by paying additional money into an accumulated cash account. The policy owner can access the accumulated savings in later stages, typically longer than six years from opening the policy.

But consumers may not have been made aware that the overall cost of the insurance premium reduces the amount of the money going into the savings account, and the cost of insurance increases substantially over time as the individual ages, FSRA said.

“The IRP strategy is typically considered suitable for higher net-worth individuals who require tax effective strategies, beyond those generally available, and for those who can afford to make regular contributions to fund both the premium and savings portions of the policy,” FSRA said in the review.

In addition, Greatway’s training program did not include the disclosure materials provided by insurer ivari that outline key risks for consumers. Advisers were instructed to “not highlight” the risks of the product and to “minimize, downplay and avoid the disclosure” when selling the IRP universal life policy.

If consumers express concerns about their policy, Greatway has agreed to support the policyholder in the resolution with the insurance company directly, FSRA said.