Member Article

The Sound Commercial Practices Guideline (the “Guideline”) published by the Autorité des marchés financiers (the “AMF”) in June 2013 and intended for insurers of persons or damages, holding companies controlled by an insurer, trust and savings companies or financial services cooperatives that are authorized by the AMF to conduct business in Quebec, including in particular those financial institutions governed by the statues of another province or country (collectively referred to hereafter as the “Target institutions”), has made it possible for the AMF to communicate its expectations regarding the legal requirement of financial institutions to adhere to sound commercial practices, specifically with respect to determining the necessary strategies, policies and procedures regarding the fair treatment of consumers.

In connection with its oversight work, the AMF recently forwarded to the Target institutions a request for information relating to the application of the requirements set out in the Guideline. By way of this request, the AMF primarily requires these Target institutions to undertake a self-evaluation process regarding the AMF’s expectations as stipulated in the Guideline by completing a questionnaire available on the AMF website.

The self-evaluation questionnaire proposed by the AMF is divided into eight sections – i.e. the eight topics contained in the Guideline¹ - and each of these sections includes examples of sound practices for which the Target institution is encouraged to perform a self-evaluation. The Target institutions are required to indicate whether or not these practices apply to their situation based on their nature, size, and on the complexity of their activities as well as on their risk profile by replying using a “Rating” based on a numbered scale from 0 to 4². The Target institutions are required to forward to the AMF an electronic response to this request for information by no later than September 30, 2014 using the AMF’s File Transfer Services.

In its letters to the Target institutions, the AMF specifies that the objective of its request is to allow the Target institutions to identify the points to be improved on in their process of applying the standards set out in the Guideline and to make it possible for them to correct any weaknesses identified. The AMF goes on to say that the results gleaned in connection with this process will provide it with a better overview of the progress made by the Target institutions in their efforts to comply with the Guideline requirements and to become more familiar with the practices put in place by them as part of their commercial activities.