A life insurance agent has been fined and suspended for a year after an investigation found that he violated the industry’s code of conduct by borrowing from a client and repeatedly buying and redeeming leveraged, deferred sales charge (DSC) segregated funds.
The Life Insurance Council of Manitoba ordered that insurance agent, Aime Edmond Grenier, should be suspended for a year and a day, fined $5,000 and ordered to pay costs of $3,500, after it found that he violated life agents’ code of conduct, which requires agents to “act in the best interests of the client” among other duties.
The Council also ordered that Grenier take an ethics course, retake and pass the Life Licence Qualification Program (LLQP) course and be under supervision for a year after returning to the insurance industry.
According to the Council’s decision, its investigation found that Grenier borrowed money from a client in order to “contribute to a tax shelter to obtain a tax credit, to repay a government tax debt, and to pay credit card debt.” I addition, he “facilitated the recurring placement and redemption of leveraged [seg funds] on a deferred sales charge basis.”
The Council ruled that the loans from a client represented “breaches of duties which lie at the very root of the agent-client relationship… The licensee’s duty was not to take advantage of his client. He did. The licensee was bound to ensure his interests and his client’s interests did not conflict. Instead, he created a situation where they are in fact diametrically opposed.”
As for the leveraged DSC sales, the Council said that although one interpretation is that, “he was deliberately churning the client’s account to increase his income. [The] Council in this case prefers to conclude that the licensee was incompetent in being unaware until 2017 that monies could be placed into segregated funds on a 0% commission front-end load basis.”
Ultimately, the Council concluded that he violated the code requiring him to act in the best interests of his client, to avoid conflicts and to act professionally, with integrity and honesty.
“The professional misconduct and ethical breaches in this matter are extremely serious,” the Council said in imposing penalties in the case. “They manifest a potentially significant risk to the public.”