CCIR and CISRO propose new standards for segregated funds

The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) have announced a proposed consolidated guidance on segregated funds, now open for public consultation.

The guidance is intended to clarify and standardize the expectations for insurers and intermediaries regarding the design, sale, and servicing of individual variable insurance contracts (IVICs), also known as individual segregated fund contracts.

The proposed guidance includes standards addressing:

• Client and product knowledge – Requirements for understanding customer needs, product features, and suitability.
• Sales charge controls – Expectations surrounding the advisor chargeback (ACB) sales charge option, where intermediaries may be required to repay commissions if customers withdraw funds within a specified period. This aligns with the CCIR-CISRO position on upfront compensation for segregated funds released in May 2023.
• Ongoing disclosure requirements – Incorporating final guidance on IVIC disclosures, published in April 2023.
• Corporate governance – Standards for fund administration, financial practices, and organizational oversight.

“This guidance closes gaps in the conduct standards related to the sale and servicing of IVICs as opposed to mutual funds, ensuring that customers are treated fairly,” said Huston Loke, chair of CCIR.

Patrick Ballantyne, chair of CISRO, added, “The proposed CCIR/CISRO Consolidated Segregated Funds Guidance creates a consistent national standard for insurers and intermediaries, to be implemented by each province and territory.”

CCIR and CISRO are inviting feedback on the proposed guidance from all interested parties. The consultation period will remain open for 90 days, ending on April 8, 2025. Submissions can be sent to the CCIR Secretariat. Comments may be published on the CCIR and CISRO websites as part of the consultation process.

The CCIR is an inter-jurisdictional body of insurance regulators focused on enhancing Canada’s regulatory system for the public good. CISRO is a collaborative forum of regulatory authorities working to standardize qualifications and conduct standards for insurance intermediaries.

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