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Desjardins sanctioned heavily by the AMF

by

Alain Thériault

1 August 2017 13:30

Photo : Jean-Philippe Bourgoin

Thefinancial markets Authority has sanctioned Desjardins financial Security (DFS) in the amount of one million dollars, and the Fédération des caisses Desjardins du Québec in the amount of $ 100,000, for breaches of the insurance Act and the Act respecting the distribution of financial products and services (distribution ACT). In a separate development, it has sanctioned DSF of another $ 450,000, for breach of the ACT.

In the first case, the DSF and the Fédération des caisses have admitted to not have followed sound business practices in the distribution of an insurance product for student loans group life, health, and loss of employment for students doing business with a Desjardins caisse.

When the students agreed with their cash for a repayment agreement of a loan guaranteed by the government of Quebec at the end of their studies, those who did not call their service centre to the students to determine the modalities were to add the insurance automatically, and without membership.

Cancer insurance without their knowledge

In the other case, DFS has acknowledged failing to ACT, » especially in the matter of distribution without a representative in the framework of the distribution of its product life Insurance savings (AVE). The insurer acknowledged that it did not comply with various provisions of this act and the insurance Act, adding, automatically and without any membership, as of June 1, 2016, a protection insurance type of serious illness to the police AVE existing policyholders. Protection cancer provides for the payment of a maximum of 6 250 $.

«In total, 385 000 insured had signed the insurance product AVE prior to June 1, 2016, and were subject to the shortcomings related to the addition of the Protection cancer of their insurance policy and to its method of distribution. DSF is committed to the Authority to transmit written notice to the persons referred to, not later than 31 December 2017, in order to inform them of their rights and measures have been put in place to rectify the situation, including allowing them to retain the original product that they had, without the Protection of cancer «, said the Authority.

DSF has also confirmed that the product AVE including the Protection cancer, such as offered since June 1, 2016, is the subject of a request for formal membership in accordance with the provisions applicable in matters of distribution without a representative, adds the regulator. «Because of this, the deficiencies identified by the Authority are not intended to apply to consumers who have subscribed to the product after 1 June 2016 «.

More than 11 years

In the folder of the student loans, the Authority has revealed that poor practices have persisted for more than 11 years. «The information available for the years 2013 to 2015 shows that approximately 127 784 insurance student loan have been distributed on a non-conformity during these years, for premiums paid to DFS, totaling more than 22 000 000 $ and a remuneration paid to Federation of over 1 700 000 $ for these same years,» press release of the regulator. It is for this period of the total premiums of 172,17$ per loan, and a total compensation of 13.30$ per loan.

How the situation was she able to run for 11 years before being detected? «The financial markets Authority intervened with Desjardins as soon as it had knowledge of the problem,» replied the spokesman of the Authority, Sylvain Théberge, the Journal of insurance. Contacted about the two folders, the spokesman, Desjardins group André Chapleau, said that the agency had » no intention of commenting further on these folders «.

Official response

«Desjardins regrets the inconvenience that the members concerned were able to undergo and is actively working to correct these situations. On the one hand, DFS is committed with the Authority to communicate with the holders of savings-life insurance incurred prior to June 1, 2016, and, by the end of the year, to inform them of the measures put in place to correct the situation and, on the other hand, the distribution of insurance on student loans has for the moment been suspended, » replied the Mouvement Desjardins by way of a press release.

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