WFG INSURANCE GUIDE · 2017. 3. 3. · INTERNAL USE ONLY: WFGIA CANADA INSURANCE GUIDE 3 2.6 Sales Illustrations 20 2.7 Signing Documents 21 2.8 Cash handling and Premium Payments

INSURANCE GUIDE

REVISED FEBRUARY 2015

INTERNAL USE ONLY: WFGIA CANADA INSURANCE GUIDE 2

TABLE OF CONTENTS

INTRODUCTION 8

1.1 The Company 9

1.2 Compliance Structure 10

1.3 Role of WFGIA 11

1.4 Life Insurance Licensing 12

1.5 Obtaining Sponsorship and License 13

1.6 Specific Licensing Guidelines 13

1.7 E&O/Professional Liability Insurance 13

1.8 WFGIA Errors and Omissions Insurance Coverage 14

1.9 Mandated E & O Coverage Required By Province 14

15

1.10 The Provincial Insurance Regulators 15

1.11 Insurance Links… 16

1.12 Purpose and Use of This Guide 16

2.0 ETHICAL CONDUCT 18

2.1 Responsibilities 19

2.2 Client’s Needs 19

2.3 Obligations 20

2.4 Making Representations 20

2.5 Holding Out 20


2.6 Sales Illustrations 20

2.7 Signing Documents 21

2.8 Cash handling and Premium Payments 21

2.9 Replacements 21

2.10 Twisting 21

2.11 Rebating 21

2.12 Money Laundering 22

2.13 Compensation or Payments to Third Parties 22

2.14 Appropriately Licensed Third Party 22

2.15 Referral Fees & Unlicensed Third party 22

2.16 “KNOW YOUR CLIENT” Rule / Product-Client Suitability 23

2.17 Tied Selling/ Inducements 23

2.18 Privacy & Confidentiality 23

2.19 Conflicts of Interest 24

2.20 BOOKS AND RECORDS (Client Files) 25

2.21 Agent Disclosure Requirement - Prior to Sale of Product 26

2.22 Other market Conduct Issues – General 26

2.23 Market Conduct – Golden Rules 28

3.0 AGENT LICENSING & CONTRACTING 31

3.1 Contracting and Licensing Progress 31

3.2 Updating Licensing Information 32

4.0 SALES COMMUNICATIONS 33

4.1 SALES COMMUNICATIONS – Defined 33

4.2 Sales Communications, General Approval Requirements 34

4.3 All Sales Communications 34


4.4 Unsolicited Email and Fax Advertising 35

4.5 Types of Materials that Require Approval 35

4.6 Requirement to Approve 36

4.7 Approval Requirements 36

4.8 Corporate Standards for Business Cards and letterhead 36

5.0 COMPLAINT HANDLING PROTOCOL 40

5.1 Purpose 40

5.2 Definition and Scope 40

5.3 Process 41

5.4 Timeline 41

5.5 Handling Complaints in Quebec 42

5.5.1 Purpose of the Policy 42

5.5.2 Controlling the Complaints 42

5.5.3 Definition of Complaint 42

5.5.4 Receipt of the Complaint 43

5.5.5 Complaint File 43

5.5.6 Complaint Examination 44

5.5.7 Transfer of the File to the AuthoritÉ des marchÉs Financiers (AMF) 44

6.0 SALES PROCESS & SALES ILLUSTRATIONS 45

6.1 THE SALES PROCESS 45

6.2 SALES ILLUSTRATIONS - What are they? 46

6.3 Illustration Requirements 47

6.4 Guaranteed Values or Features 47

6.5 Non-guaranteed Values or Features 48

6.6 Illustration Scenarios 48


6.7 Illustration Identification 48

6.8 Concept Illustrations 48

7.0 REPLACEMENTS 49

7.1 What is a Policy Replacement 49

7.2 Duties of Agent 49

7.3 Direction 50

7.4 Compliance 51

8.0 INSURANCE OR CAPITAL NEEDS ANALYSIS 52

8.1 Costs Associated with Premature Death 53

8.2 Determining the Right Amount of Insurance 53

8.3 How is the Analysis Done 53

9.0 SEGREGATED FUNDS 54

9.1 Know your Segregated Fund Client 54

9.2 Priority of Client’s Best Interest 55

9.3 Full Disclosure 56

9.4 Executing Client Instructions 56

9.5 Proper Books and Client Records 56

9.6 MGA Supervision Policy 57

9.7 Point of Sale Disclosure 57

10.0 LEVERAGED INVESTING 58

10.1 What is leveraging? 58

10.2 Agent Leverage Tool Kit 61

10.3 Introducing Leverage to Clients 61

10.4 Explaining the Risks of leveraging 61


10.5 Exit Strategy 61

10.6 Leverage Review Worksheet Instructions 62

10.6 Submitting the leveraged account for approval 62

11.0 CONTINUING EDUCATION AND WFGIA 64

11.1 PRE-LICENSING TRAINING 64

11.2 Continuing Education 64

12.0 ANTI-MONEY LAUNDERING 65

12.1 Introduction 65

12.2The Compliance Regime 65

12.3Three Stages of Money Laundering 65

12.4 Process for Reportable Transactions 65

12.5 Process for Identifying Suspicious Transaction 66

12.6 Process for Reporting Suspicious Transactions 67

12.7 Process for Identifying and Monitoring PEFPs 67

12.8 Process for Identifying Potential High Risk Clients 68

12.9 Processes for Record Keeping 68

12.10 Business or Company Name Accounts 69

12.11 Guidance Manual 69

13.0 PRIVACY & PIPEDA 70

13.1 introduction 70

13.2 What information is considered personal? 70

13.3 Failure to Comply 74

13.4 Do Not Call Rules for Financial Agents 74

13.4 WFGIA Privacy Policy & Compliance 75


14.0 OTHER MGA RULES 75

14.1 Fee for planning 75

15.0 APPENDIXES 76

15.1 Appendix A 76

15.2 Appendix B 77


INTRODUCTION

World Financial Group Insurance Agency of Canada Inc. (WFGIA) has a long history of ethical market conduct in the marketing, sale and service of insurance products. However, with the intensity of change that has occurred in the marketplace in recent years, the introduction of innovative but complex products, increased emphasis on disclosure and the increase in regulatory requirements, Managing General Agencies (MGAs) such as WFGIA have adopted a more formalized approach to compliance and supervision.

The objective in doing so is to create an increased awareness of the need for a high ethical standard by agents in their dealings with clients and prospective clients.


1.1 THE COMPANY WFGIA is an insurance agency licensed for the sales and distribution of life insurance and related products across Canada.


1.2 COMPLIANCE STRUCTURE WFGIA activities are regulated by Provincial Insurance Commissions and Councils where applicable, and by contractual arrangements with life insurance companies. As a

•WFGIA is licensed as a corporate agency.•The WFGIA designated individual is Richard Williams.Ontario

•Registered in the “sector of Insurance persons”.•Compliance and complaint handling requirements – Karl

Netten– Officer in charge. Quebec

•WFGIA has a corporate license•DR - Karl NettenManitoba

•WFGIA is licensed as a corporate agency.•The WFGIA designated individual is Karl NettenSaskatchewan

•WFGIA is licensed as a corporate agency.•Supervisor: Paul Spalding. Nominees: Paul Spalding & Karl

NettenBritish Columbia

•WFGIA is licensed as a corporate agency.•The WFGIA is Korean Whitney.Newfoundland

•WFGIA is licensed as a corporate agency.•The WFGIA designated individual is Karl Netten.Alberta

•The province of New Brunswick and the Yukon territory do not issue corporate licenses. Individual agents complete individual applications. In New Brunswick Karl Netten is the Designated Representative.

New Brunswick, Yukon

•WFGIA is licensed as a corporate agency.•The WFGIA designated individual is Karl Netten.Nova Scotia

•Corporate entities are not required to have a corporate license in these provinces/territories.

Nunavut, Northwest Territories

•WFGIA is licensed as a corporate agency•The WFGIA designated individual is Karl Netten.

PEI


Managing General Agency (MGA), life products including segregated funds are distributed by licensed agents contracted with WFGIA. Agents are responsible for compliance and adherence with insurance laws, regulations and contracted insurance company policies. The WFGIA insurance Guide (the “Guide”) describes policies and procedures designed to help agents comply with their responsibilities as a life licensed agent and where applicable insurance supervisor. The guide is intended to be a reference tool to assist agents in servicing their client’s policies in a professional manner, but cannot address all rules, statutes, regulations and policies that are applicable to all activities. As agents that have passed the appropriate examinations, agents are expected to have an understanding of the rules and regulations that pertain to their activities and are responsible for complying with the requirements of the rules and requirements of respective jurisdictions. Do not hesitate, to contact WFGIA or your insurance supervisor with any questions you have concerning this Guide or any statute, regulation, or rule regarding life insurance sales activities. 1.3 ROLE OF WFGIA As an MGA, WFGIA is responsible for the following duties and provides the following services: AGENT RECRUITING - The MGA actively recruits new and existing Agents to their organization and will assist new recruits to follow the requirements and unique aspects of WFGIA through mentoring and training. LICENSING AND MONITORING - Independent agent licensing is a provincial jurisdiction. WFGIA verifies that Agents renew their license as required and also verify that agents carry sufficient E & O (Errors and Omissions Insurance) as required by provincial regulation and WFGIA. CONTRACTING - WFGIA provides agents access to contracts with those insurers with whom WFGIA is contracted. The MGA facilitates the submission of completed contracting requirements between the Agent and the Insurer. As per contracts with Insurers, WFGIA conducts agent background checks and screening in the agent selection process. WFGIA may also rely upon checks conducted by Ivari which also sponsors WFGIA agent licenses (where required). ON-GOING TRAINING - WFGIA is active in assisting the agent with obtaining CE credits, training, and notices/bulletins regarding changes to insurance rules and best practices. Agents should ensure that they stay informed of the rules that apply to their local jurisdictions. Agents should regularly visit Council websites to check for any updates in regards to changes and requirements. WFGIA also acts as a conduit to provide insurer’s access to WFGIA Agents. CE Credit Management is the responsibility of the Agent and is subject to audit by either/all the insurer, the regulator and WFGIA. WFGIA continues to enhance the offering of continuing education and CE credits offering through WFG EI.

http://www.wfgei.com/


BUSINESS CONDUIT - WFGIA works as a conduit between agents and insurers so that full information on applicants is provided to insurers. This information is provided for underwriting decisions to be made as well as participation in the new business policy issue and placement process. COMPENSATION - WFGIA acts as a conduit between the insurer and agent for timely and accurate new and renewal commission management. Agent compensation and the flow of commissions are processed through WFGIA. Insurance commissions, including segregated funds, are paid by the insurer directly to WFGIA. Agent compensation is determined by WFGIA. Charge back commission is the responsibility of the agent and if not dealt with within a predetermined timeframe WFGIA initiates the commission recovery process with the agent. AGENT DISCLOSURE FORM TO CLIENTS - This is an industry standard that is applied uniformly across the country designed to ensure agents meet regulatory objectives and provide consistent and complete disclosure to consumers. Agents are required to use a disclosure statement that is appropriate to the WFGIA business model and their own unique circumstances and is part of the product application process. Refer to details – Section 2.0 – Ethical Conduct INSURER RELATIONS - WFGIA acts as a conduit between the agent and insurer coordinating new business submission and settlement, in-force business servicing requirements, new product introduction and training, existing product training meetings and regulatory updates. MARKET CONDUCT ISSUES AND COMPLAINT MANAGEMENT - The insurer controls the complaint process. WFGIA assists in the complaint management process. The contract (Policy) is between the client and the insurer. Client complaints often begin with the insurer and then are relayed through WFGIA to the agent. WFGIA facilitates the process and the insurer responds to the client. 1.4 LIFE INSURANCE LICENSING To sell life insurance products through WFGIA, every agent must have a license in the province for which they wish to do business. The specific requirements for each province may vary (please refer to MyWFG for specifics on each province), however the general process for agents seeking their first life license for most provinces is the same. To sell a life product from a specific provider company through WFGIA, an associate must go through a three-step process. The agent must learn the licensing process, complete the applicable forms and pass the HLLQP exam in the province.

The agent must obtain Sponsorship through Ivari and obtain the provincial license.

The agent must be contracted (appointed) with WFGIA and/or certain insurance provider companies.


1.5 OBTAINING SPONSORSHIP AND LICENSE Every WFGIA associate seeking to sell a life product for WFGIA in a province must obtain sponsorship (where required) and the province’s license through Ivari. The following is the process to obtain this sponsorship and license: The agent must submit to WFGIA Life Licensing Department, a copy of their HHLLQP exam marks (*Ontario requires the original exam marks), the appropriate provincial license application form and appropriate fees for the province.

The agent must complete and submit an E&O application to WFGIA (see E&O Procedures).

The agent must complete and submit to WFGIA an Application for Contract Sponsorship. This is also known as the CHLIA Application for License (Contract)

WFGIA will obtain an Equifax credit report.

WFGIA will complete an Inspection Report.

WFGIA will submit the applicable forms to Ivari.

Ivari will process through the forms and submit them to the appropriate Provincial Insurance Commission or Council. Most provinces forward the issued licenses directly to the agent, and therefore, the agent is responsible for forwarding to WFGIA Life Licensing Department a copy of their issued license. However, Ontario (FSCO) will send the issued licenses to WFGIA Life Licensing Department for distribution to the agent.

Ivari will send the approved Contract for Sponsorship back to WFGIA who then forwards it on to the agent. Note, some Councils now have electronic systems in which the above is conducted electronically and agents may (or may not) receive paper copies of their licenses.

1.6 SPECIFIC LICENSING GUIDELINES The province of Quebec does not have levels of insurance licenses. All agents are permitted to work part-time in a field other than financial services, with the exception of judge, police officer, lawyer, treasurer, accountant, real estate broker, management of a union, etc. According to Bill 188, Section 4 the agent’s time should be ‘devoted primarily to insurance activities.’ Section 2; some approved professions other than insurance that the agent cannot be involved in due to inherent conflict of interest. Note: Insurance Council of British Columbia has also issued guidelines regarding part-time activities and conflicts of interest. 1.7 E&O/PROFESSIONAL LIABILITY INSURANCE Professional liability insurance covers you for errors and omissions made while doing your job and giving advice to your client. It is often called errors and omissions insurance (E&O). As an agent you are susceptible to liability claims brought on by the consumers' heightened expectations regarding the services they receive and their willingness in

http://www.wfg-online.com/nonssl/BusCenter/FieldManual/canada/Canada_Compensation_Plan/Canada_Errors_Omissions_Insurance.htm

http://www.wfg-online.com/nonssl/BusCenter/FieldManual/canada/Canada_Compensation_Plan/Canada_Errors_Omissions_Insurance.htm

http://www.wfg-online.com/NonSSL/BusCenter/FieldManual/Wizard/documents/Sponsorship.pdf


taking grievances and dissatisfaction through legal channels. Even though an agent may have done nothing wrong, the agent may still be susceptible to a suit or client complaint. All legal actions are costly and time consuming. Protect yourself. Protect your business. 1.8 WFGIA ERRORS AND OMISSIONS INSURANCE COVERAGE All licensed WFGIA associates are required to activate their Errors & Omissions Insurance through World Financial Group Insurance Agency of Canada Inc. Every Life Licensed agent or prospective agent will need to complete the eContracting online application. For detailed instructions and payment procedures and information about services insured refer to the applicable section in MyWFG. 1.9 MANDATED E & O COVERAGE REQUIRED BY PROVINCE

•Minimum $1,000,000 per claim and a minimum aggregate of $2,000,000.British Columbia

•Minimum $500,000 per claim and a minimum policy payout for all claims of $2,000,000.Alberta

•Minimum $1,000,000 with $1,000,000 extended coverage for fraud.Saskatchewan

•Minimum $1,000,000 per occurrence and a minimum aggregate of $5,000,000 including prior acts and tail coverage.

Manitoba

•Minimum $1,000,000 per claim and a minimum aggregate of $2,000,000 with two years tail coverage and extended coverage for fraud.

Ontario

•$500,000 per claim and $1,000,000 per year and any deductible amount stipulated in contract cannot exceed $10,000.

Quebec

•Coverage amounts not stipulated but consistent coverage required by WFGIA Insurance policy.

New BrunswickPEI, Nova Scotia, NWT

•Minimum $1,000,000 with $100,000 coverage for fraud.Newfoundland and Labrador

https://secure.ivari.ca/WFGLCC/econtracting.html


There is no initial payment required at time of application. The WFGIA E&O administrator will order the E&O certificate and set the associate up in the WFGIA system to have payments deducted from their commissions on a monthly basis. If an associate has a negative account balance, the system will generate a Collections letter every 30 days, advising the associate of any outstanding Errors & Omission Debit. You may forward payment by certified cheque, money order or credit card.

1.10 THE PROVINCIAL INSURANCE REGULATORS Provincial Regulation Each Canadian province and territory has established a system of law to regulate the business of insurance within its geographical borders. Provincial regulation of insurance includes market conduct laws that make sure insurance companies conduct their businesses fairly and ethically and regulate virtually all nonfinancial operations of insurers. This includes distribution and licensing, conflicts of interest and suitability, replacements, rebating, other prohibited sales practices and claims. Agents who sell life insurance and annuities must be licensed as insurance producers by each jurisdiction (province or territory) in which they do business. Although laws vary from province to province, some uniformity exists because many provincial laws are based on guidelines put forth by the Canadian Council of Insurance Regulators. The CCIR is an inter-jurisdictional association of regulators of insurance. CCIR works cooperatively with other financial services regulators to enhance consumer

Potential Sourcesfor

E&O Claims

• Misrepresentation of coverage• Improper instruction in

completing application• Improper instruction in presenting

a claim• Failure to secure coverage• Failure to secure proper coverage• Error in cancellation• Mishandling of funds• Failure to act in a timely manner• Breach of confidentiality

How to Prevent a Claim

• Avoid inaccurate statements.• Avoid misleading statements. • Avoid exaggerated statements• Avoid statements of which you do

not have direct knowledge.• Avoid representations that you

have not verified• Review documents for accuracy.• Review documents for

completeness• Create files. Maintain paper files.

Purge files• Document. Document. Document.

With clients, insurers, MGA's, and others

http://www.ccir-ccrra.org/

http://www.ccir-ccrra.org/


protection and to develop and harmonize insurance policy and regulation across jurisdictions. Principle based directives from CCIR are adopted by Provincial & territorial insurance regulators along with supplemental insurance councils in certain provinces (British Columbia, Alberta, Saskatchewan, Manitoba). The CCIR’s principle based directives focus on suitability and conflict of interest, market conduct issues, distribution and licensing including the administration of the HLLQP (Life License Qualification Program) and complaint resolution. 1.11 INSURANCE LINKS… Links to insurance websites are provided as references only, and as a convenience. WFGIA does not endorse any services or products that may be on those websites and is not responsible for the content of any linked website.

CCIR http://www.ccir-ccrra.org/CCIR/index.htm FSCO http://www.ontarioinsurance.com/ AMF- L’Autorite http://www.lautorite.qc.ca/index.en.html Canadian Life & Health Association http://www.clhia.ca/ Advocis http://www.advocis.ca/ Financial Planners Standards Council (FPSC)

http://www.fpsccanada.org/

Assuris http://www.assuris.ca/ Ombudservice for Life and Health Insurance

http://www.olhi.ca/

1.12 PURPOSE AND USE OF THIS GUIDE This guide provides an appropriate vehicle for us to bring together our corporate standards and those of the industry for ethical market conduct and to share these with our agents. The manual is designed to bring this material together in a single source of reference. These standards combine regulatory requirements found in Provincial Life Insurance Acts, industry standards developed by Advocis, CLHIA and supported by its member companies and their agents including MGAs like WFGIA, and standards developed by WFGIA itself and supported by its senior management. Compliance with these policies and guidelines by WFGIA agents is overseen and supervised by the WFGIA Compliance Department. It is important that individual agents currently under contract are made aware of the content of this compliance guide and that new agents are provided copies of the materials when hired. Questions in regard to the content of this manual should be addressed to:

Compliance Department World Financial Group Insurance Agency of Canada Inc.

5000 Yonge Street, Suite 800 Toronto, Ontario M2N 7E9

T R O

http://www.ccir-ccrra.org/CCIR/index.htm

http://www.ontarioinsurance.com/

http://www.lautorite.qc.ca/index.en.html

http://www.clhia.ca/

http://www.advocis.ca/

http://www.fpsccanada.org/

http://www.assuris.ca/

http://www.olhi.ca/


Ethical market conduct by its nature involves behavior in accordance with a set of principles designed to exhibit a high standard of professionalism in how we as an Insurance Agency and you as agents, deal with clients and prospective clients The principles that follow reflect this philosophy:

To conduct business according to high standards of honesty and fairness and to render a level of service to our customers which, in the same circumstances, we would apply to or demand for ourselves.

To provide competent and customer-focused sales and service. To engage in active and fair competition. To provide full and accurate disclosure at the point of sale and beyond. To only use advertising and sales materials that are clear as to purpose and

honest and fair as to content. To maintain a system of supervision and review that is reasonably designed to

achieve compliance with these principles of ethical market conduct. To provide for fair and expeditious management and adjudication of customer

complaints and disputes. P R I N C I P L E S O F E T H I C A L WFGIA is committed to the highest standards of ethics in the conduct of its business and to complying with all laws and regulations. WFGIA will always deal with integrity in regard to our clients.


2.0 ETHICAL CONDUCT This Code of Ethical Market Conduct sets out the standards to which we expect our agents to adhere in their dealings with clients and in their representation of WFGIA and its approved products. It is intended to supplement existing codes of ethics or conduct developed and published by Advocis and the codes of ethics issued by provincial regulatory bodies. Parts of these codes may be the subject of provisions or regulations of the Insurance Acts of the provinces and as such are enforceable as law. The Advocis/CLU Institute Code of Professional Conduct (CPC) sets out a list of principles that an Advocis Member is expected to abide by in his or her business activities and in his or her liaison between clients and suppliers of insurance, and/or financial products or services. In addition, many of the areas covered by this and other codes of ethics are subject to the CLHIA Guidelines on Reporting Unsuitable Activities by Agents. Under these guidelines, all life insurance companies are required, following an investigation by the company, to report to the provincial regulator any activity by agents that it reasonably believes to be unsuitable. Serious misconduct could be as a result of a single incident or occur more than once and therefore be considered part of the agent’s regular method of conducting business. As an MGA contracted with a number of insurance providers, WFGIA will co-operate and participate with insurers as invested partners to ensure the activities of contracted agents remain suitable and compliant. This code is intended to supplement the applicable WFGIA contract under which an individual or corporation operates. It applies to conduct and activities with respect to all products and services approved by WFGIA.


http://www.advocis.ca/content/pdf/CPC_Oct09.pdf


2.1 RESPONSIBILITIES The interest of clients and prospective clients must be placed before the interests of the agent at all times during the sales and service process. Recommendations must be for the appropriate amount of coverage and product that best meets the client’s circumstances. The agent is to provide service, advice or information only where he/she is licensed and where their knowledge makes them competent to do so. Agents should not offer legal or other professional advice outside the scope of their knowledge or professional standing. The following summarizes some of life insurance agents’ duties in a transaction:

before conducting a transaction, undertake sufficient fact-finding and needs analysis to properly assess a client’s circumstances, goals, and objectives;

disclose any information relevant to the client’s insurance needs that a reasonable and prudent licensee would disclose in the same circumstances;

fully inform clients about all aspects of the insurance products they purchase, including any changes that occur during the term of the policy;

do not use sales materials or illustrations that are misleading or unnecessarily confusing;

maintain proper records of clients’ insurance matters and provide for the safekeeping and confidentiality of those records;

deliver insurance policies or evidence of insurance coverage within a reasonable time as required;

fully and accurately disclose any information material to the insurer’s decision to issue a contract of insurance; and,

fully and accurately complete and/or provide required documentation including the application, illustrations, summary information folders and/or Basic Disclosure Declarations [LIRD] for replacement of existing insurance policies (if applicable).

send required documentation to insurer(s). Note in some jurisdictions, there is a requirement that a copy of the LIRD is sent to the new Insurer as well as the insurer for which the policy is being replaced. Agents should be mindful of all requirements in their jurisdiction.

2.2 CLIENT’S NEEDS It is expected that agents will base their recommendations solely on the established needs of the client or prospective client, after gathering facts on which to base such recommendations, and taking into account the client’s financial position and tolerance for risk. Refer to Section 8 on Financial Needs Analysis.


2.3 OBLIGATIONS Legal Obligations Sound business conduct requires compliance with the laws and regulations that apply directly to the life insurance industry. Agents must be aware of these laws and regulations and be familiar with their legal obligations. Ethical Obligations The life insurance industry is a business of trust. Agents are expected to earn that trust through a set of high ethical values in dealing with their clients and WFGIA. 2.4 MAKING REPRESENTATIONS Agents are required to make representations to clients and prospective clients that contain clear, relevant, honest, complete and factual information. Recommend only WFGIA approved products and services on their merits and will refrain from discrediting or defaming competitors’ products and services. When presenting the terms and conditions of these approved products, you must do so accurately, fully explaining both the guaranteed and non-guaranteed values and features.√ 2.5 HOLDING OUT Agents must not hold themselves out to the public in a manner that is misleading about companies they represent or qualifications or designations they possess. Use of WFGIA letterhead, business cards, advertising etc. must comply with provincial regulations and WFGIA’s Corporate Standards for Business Cards and Letterhead. Agents should use only WFGIA’s approved marketing materials. Personally produced materials including direct mail letters, sales aids, web sites, social network tools, newspaper and radio ads, seminar presentations or presentations using PowerPoint or similar software, that include the WFGIA name or corporate logo or that present WFGIA’s products, must comply with the above standards and be approved by WFGIA’s Compliance/Marketing Departments before use. Refer to details in Section Business Cards & Letterhead. 2.6 SALES ILLUSTRATIONS Agents must use only illustration software provided for approved products to illustrate these products to clients and prospective clients. WFGIA instructions on complying with the Illustrations are provided in this guide and agents are expected to be aware of their responsibilities under these guidelines. Agents should comply with insurance company requirements for submitting copies of illustrations with life applications submitted to the insurance company. The illustration must match the sale that was made details of which are contained in the submitted application. Refer to details in Section 6 Sales Process and Sales Illustrations.


2.7 SIGNING DOCUMENTS An agent must not sign his/her client’s name to a document even if authorized to do so by the client. It is imperative that all documents only be signed by the owner of the policy, and where necessary the beneficiary, and that these be authentic. Any attempt by anyone to sign a document on behalf of the policy owner or beneficiary, even where permission to do so has been received, constitutes a forgery and a criminal act. Similarly, an agent must not sign as witness to a signature he/she has not actually witnessed, nor to a signature known to be forged. Nor must an agent obtain a client’s or prospective client’s signature on a blank form. 2.8 CASH HANDLING AND PREMIUM PAYMENTS In accordance with the agent’s contract with WFGIA, agents must not remit, on behalf of clients, payment for premiums or other transactions using a personal cheque or a cheque issued by the agent’s company. Any such payment will not be accepted. Agents must not accept cheques or money orders from clients made payable to “cash” or to the agent. All cheques must be made payable to the life insurance company involved and should clearly identify the payee to satisfy Anti-Money Laundering requirements. For Segregated Fund Purchases, clients may make the cheque payable to World Financial Group Insurance Agency of Canada Inc. In Trust. 2.9 REPLACEMENTS All provinces in Canada have regulations under their respective Insurance Act dealing with replacements. Agents are expected to be familiar with these regulations and to carry out their requirements, particularly in regard to disclosure and disclosure statements and notification to other companies. These apply to both internal and external replacements. Replacements are not by themselves evidence of unsuitable conduct; however they should only be undertaken when they are in the best interests of the client. Refer to Section7, Replacements. 2.10 TWISTING Agents must not engage in “twisting” which is the unethical act of persuading a policyholder to drop a policy solely for the purpose of selling another policy, without regard to possible disadvantages to the policyholder. It can also involve using policy values, either through loans or the redirection of dividends, of one policy to purchase another. 2.11 REBATING Under no circumstances must agents rebate premiums to clients, or engage in any activity that could be interpreted as rebating. Rebating is the making of an agreement as


to the premium to be paid for a policy that is lower than that set forth in the policy. It also includes paying or rebating the whole or part of the premium or any consideration or thing of value intended to be in the form of a premium rebate (permitted in Alberta and to a limited degree in British Columbia).Rebates are inducements to purchase insurance. Inducements can be monetary or “in kind” considerations such as gifts, purchases of services, etc. It is illegal. You should be extremely careful in this area and if you use any form of “gift” as a part of your sales process, you should check with WFGIA to ensure this is appropriate or could be construed as rebating. 2.12 MONEY LAUNDERING Agents must also not engage in any activity that directly or indirectly involves money laundering. Money laundering is the process of transferring property or proceeds of any property with intent to conceal the true origin and ownership of such property, knowing that all or part of it was obtained or derived directly or indirectly as a result of a criminal or drug offence. Refer to details in Section – Anti-Money Laundering. 2.13 COMPENSATION OR PAYMENTS TO THIRD PARTIES Agents shall not pay or share compensation from the sale of insurance with any third party or parties that do not hold an applicable insurance license or equivalent certificate. This includes gifts of value or monetary payments. Gifts or payments from a referral may expose the agent to a charge under the Insurance Act for sharing compensation with a person who does not hold an insurance license. If the person receiving the gift or payment was found to have been in a position to influence the purchase, a charge of rebating may also apply. 2.14 APPROPRIATELY LICENSED THIRD PARTY Within the insurance industry, it is a common practice for agents to work together in the marketing of insurance products to a client. More than one appropriately licensed insurance agent may share commissions earned as a result of a joint venture, therefore, the sharing of commissions between appropriately licensed agents is allowable. For WFGIA agents this is only permitted when commissions split occurs with another WFGIA agent. Splits with non-WFGIA agents are not permitted.

2.15 REFERRAL FEES & UNLICENSED THIRD PARTY The rules on finder or referral fees (“referral fee”) differ depending on whether or not the person receiving the compensation is an appropriately licensed insurance agent and what insurance activities the third party has conducted. Referral fees may be paid to an unlicensed person. When making a referral, an unlicensed person can direct a client to a licensed agent or, at the direction of the client, provide the client’s name to a licensed agent.

Before paying a referral fee, certain conditions must be met:

Agents must be satisfied that the person to whom they are paying the referral fee did not engage in any insurance activities with the client. Insurance activities include discussing the merits of a particular insurance product or the client’s insurance needs; and once satisfied the third party did not act as an insurance agent, a written disclosure must be


provided to the client stating that the person is being compensated for the referral. The written disclosure is to be provided before arranging an insurance transaction. It is strongly suggested that agents maintain a copy of the written disclosure in their files as proof of meeting this license condition.

2.16 “KNOW YOUR CLIENT” RULE / PRODUCT-CLIENT SUITABILITY Agents must make every effort to ensure they have made a diligent and business-like effort to analyze their client’s needs, risk tolerance, objectives and financial circumstances in order to determine the appropriateness of the product and/or other recommendations being made.

2.17 TIED SELLING/ INDUCEMENTS It is an offense to make the purchase of product “A” conditional upon the purchase of product “B”. Agents must refrain from any attempt to impose this or other conditions on any client.

Agents must also not make any payment or provide any gift, or any offer to pay or give, directly or indirectly, any money or thing of value as an inducement to convince any prospective purchaser to buy insurance.

2.18 PRIVACY & CONFIDENTIALITY Maintaining the confidentiality of customer information is a condition for all life licensed agents. Agents must hold in strict confidence all information acquired in the course of the professional relationship concerning the personal and business affairs of a client, and must not divulge or use any such information other than for the purpose of that transaction or of a similar subsequent transaction between the agent and the same client unless expressly authorized by the client or as required by law to do so. Agents also have a duty to maintain complete privacy of all information concerning a client. An agent shall:

Use only lawful means to collect personal information; Inform the client what information must be disclosed in order to conduct

business on the client’s behalf; Obtain confidential information regarding a client’s personal or business affairs

only directly from, or with the permission of the client; Not disclose information concerning the client to any third party without the

client’s written authority to do so; Disclose information when it is required by order of lawful authority; Protect all personal information about a client with appropriate security

safeguards. Refer to details in Section 13 – WFGIA Privacy Policy.

In addition, agents must not make photocopies of applications or medical reports required by insurers in the normal course of business; except photo ID in order to satisfy Money Laundering Regulations. In the event of a breach, Agent’s should contact WFGIA Compliance immediately.


2.19 CONFLICTS OF INTEREST The activities an agent is involved in, other than the practice of insurance, must not compromise or discredit the industry. An agent shall:

Disclose to a client all conflicts of interest or potential conflicts of interest associated with a recommendation;

Disclose if a conflict of interest exists. Provincial Regulations Although provincial regulations may differ with regards to prohibiting and declaring conflicts of interest, one constancy exists in all province – the expectation that the representative must act in the best interest of his/her clients and that these intentions be placed ahead of all others. The rules governing conflicts of interest of agents or sales representatives in life insurance is far from being generic (whereby the same rule applies to all). Where life agents recommend the wrong kind of insurance or an unsuitable product just because they will make more money or derive greater benefit for themselves, different scenarios would ensue across Canada depending on the domicile of the consumer.

Ontario

•Any conflict of interest of the agent that is associated with a transaction or recommendation must be disclosed in writing to a client or prospective client. •The agent would be breaching regulation and his or her conduct would be unlawful unless conflict of interest disclosure has been made in writing.

Quebec

•An agent must, in the practice of his or her profession, avoid any conflict of interest.•The agent would be in violation of the applicable Code of Ethics, notwithstanding disclosure

British Columbia

•It is unethical for an agent to place himself or herself in a conflict of interest with a client unless the client has approved of his or her conduct after full disclosure of the conflict, preferably in writing. •The agent would be acting unethically unless his or her conduct has been approved by the client whether in writing or not.

Alberta

•An individual is prohibited from engaging in another occupation or business that would place the individual in a conflict of interest position when acting as an insurance agent. "Conflict of interest position" is legally defined to mean a situation where an agent has an incentive to act other than in the best interest of the client.

Manitoba

•Licensed insurance agents may sell insurance full or part-time provided (a) there is no conflict of interest and (b) the additional occupation they are involved in is not on the list of restricted occupations. •The agent would be in breach of the Conflict of Interest Guideline if his or her additional occupation is not a restricted one such as acting as a financial planner.


In cases where the agent is found to have fiduciary duty for advice giving, the conflict of interest situation described above would constitute a breach of that duty giving rise to professional liability and cause for conflicting self-interest lawsuits. In reality, the entire issue of conflicts comes down to this point: Does the agent's self-interest in the recommendation made affect his or her objectivity? 2.20 BOOKS AND RECORDS (CLIENT FILES) All agents are required to maintain proper records and accounting books (also referred to as client files) relating to their insurance activities as a condition of licensing. Licensees are expected to meet any requirements outlined in their contracts with insurers. Agents should maintain their records in sufficient detail to ensure customer protection. WFGIA requires that records be kept by agents to show that certain license conditions and the agent’s duty to the client have been met. What should be in the files:

Copies of needs analysis / financial plan / KYC/ Investment Profile; Copies of Illustrations shown to clients (dated); Communications with client via e-mail letters; Notes on discussions with clients (date stamped and notes on what was discussed

via the telephone or during a meeting); Copies of forms completed (i.e. replacement forms); Policy delivery receipt [where provided by Insurer]; Any Client complaints; The method of remuneration for each product sold or service rendered to the

Client; What should not be in the file:

Original Policy (Should be delivered to client); Pre-signed blank forms ; Client’s copy of transaction / correspondence; Medical Information (shred); Copy of Lab Test results and Physician notes (shred); Copy of health questions on application (shred); Mutual funds documentation (should be kept in a separate file)

How long books and records should be kept will vary depending on the nature and complexity of the transaction. Agents are cautioned that they may be subject to legislative requirements including the Insurance Act, tax legislation and the Companies Act, Privacy, Money Laundering and Terrorist Financing Acts.


2.21 AGENT DISCLOSURE REQUIREMENT - PRIOR TO SALE OF PRODUCT Prior to the sale of an insurance product agents must provide the client with a disclosure that outlines the following information:

that the transaction is between the client and a named insurance company; the particulars of the relationship between the agent and the insurance company; the nature and extent of any business or financial interest, if any, the agent has in

the insurance company and the insurance company has in the agent: the nature and extent of whatever interest, if any, the agent has in the

transaction, including, but not limited to, whether he or she has the right to receive a commission or other remuneration in respect of the transaction (the amount of remuneration or commission does not have to be disclosed); and

where a commission or remuneration is payable, the identity of the company or person paying it.

Such disclosure is required on every initial transaction with a client and every subsequent transaction where there is a change in the information contained in the original disclosure. As an example, if a product is being placed with a new insurer, another disclosure is required. (Refer to Sample Agent Disclosure in Appendix A) 2.22 OTHER MARKET CONDUCT ISSUES – GENERAL In addition to the specific subjects covered previously, there are a number of other market conduct pitfalls which the insurance professional should avoid. Market conduct problems can arise because of a lack of attention to details that seems separate from the sales process (e.g., policy delivery, complaint tracking and record keeping). However, failure to pay attention to these details can lead to problems. Rescission Right All insurers provide a 10-day “free look” period after the delivery of a life insurance policy during which time the client can return the policy without cost. This period begins when the policy is delivered. Delivery is considered to take place when the policy owner is given actual possession of the policy. Insurers do not necessarily require you to have a Policy Delivery Receipt signed for all new business cases. However, it is good business practice to maintain a record of the date the policy was delivered as part of your normal client records. Not Taken Policy A key part of being able to meet regulations is the prompt notification of a “not taken” policy. Failure to provide prompt notification leads to delays which may result in customer complaints. Dissatisfaction with the agent and the company, as well as regulatory complaints, are potential outcomes when client premiums are not returned promptly. Legal Advice


Canada has strict regulations regarding who can and cannot provide legal advice. Often, problems arise from an insurance professional's best efforts to aid the client. These may be misinterpreted as legal advice. It is never in your best interest to cross the line of providing legal advice, such as helping to draft or complete contracts, wills or agreements. It is best to provide a disclaimer whenever discussing issues that have potential legal implications, such as wills, trusts, etc. Complaints Complaints are important to regulators, companies and insurance professionals. At the regulatory level in Canada regulations are in place that requires insurance companies to track, monitor and resolve complaints. WFGIA’s maintains a complaint-tracking program. Please refer to the section 5 of this guide which outlines WFGIA’s Market Conduct Complaint Protocol, and its policy to resolve complaints fairly and expeditiously. Agents know that a satisfied client is good for business. Complaints are usually defined as written communications, but can also be verbal. Privacy PIPEDA Privacy regulations and similar legislation in certain provinces require you to notify and obtain consent from your clients for the collection, use, disclosure and retention of personal information. Note also that you may not maintain copies of WFGIA applications or medical information at any time. If you currently do not maintain complete records, you must start immediately. (For more information, refer to Section 13 on Privacy & PIPEDA). Compliance Bulletins In addition to information on policies and procedures, WFGIA sends out bulletins about changes in regulations. They also provide information on how to stay compliant. Make sure you set up and maintain these documents and files. They are critical in helping you protect your clients and your business.

http://www.priv.gc.ca/leg_c/leg_c_p_e.cfm


2.23 MARKET CONDUCT – GOLDEN RULES

1•Properly identify yourself, your company and your role as an insurance agent. Never conceal

or disguise that you sell life insurance.

2•Never call life insurance or annuities by any name, which disguises that they are insurance

policies or contracts, such as calling them plans or programs.

3•Sell only products for which you hold proper licenses and for which you have the proper

training and experience.

4•Never provide services, such as legal advice, or sell products, such as securities, for which

you are not duly licensed and trained.

5

•Use only company approved sales materials. Never use personalized sales materials, including advertising, illustrations, videos or seminar presentations that use WFGIA's name or describe WFGIA’s products that have not been approved by WFGIA's head office.

6•Use words, terms and symbols which accurately describe the features and benefits of the

products you sell.

7•Never exaggerate, inflate or make unsubstantiated claims about your products, services or

company.

8•Disclose to clients accurately and in language they can understand all relevant information

about the products and services you recommend.

9•Never minimize, ignore or avoid discussing aspects of your products and services because

they are complicated or potentially unfavorable.

10•Disclose federal tax-related issues regarding the products and services you recommend


11•Never discuss tax-related information.

12•Show clients only complete, company-approved illustrations.

13•Never develop “home grown” illustrations or present tabular numerical data which has not

been approved.

14•Fully explain the hypothetical nature of illustrations, the guaranteed and nonguaranteed

elements, and the assumptions and limitations of the illustration.

15•Never use the terms “vanish” or “vanishing premium” when discussing the mechanics of using

accumulated values to pay future premiums or insurance charges.

16•Provide a signed copy of the complete illustration to the client and send a signed copy to the

Company.

17•Never give clients partial illustrations or only a supplemental illustration.

18•Make yourself aware of the law in regard to rebating and follow it scrupulously.

19•Never give direct monetary or indirect “in kind” rebates.

20•Accurately comply with client disclosure and needs analysis requirements related to policy

replacement or fail to complete all replacement forms on a timely basis.


21•Form the habit of using a checklist to ensure you disclose all relevant information.

22•Never fail to provide all relevant information during a transaction to influence a client's

decisions.

23•Deliver the policy promptly and record the delivery date.

24•Maintain complete client files and a master compliance file which includes all company

compliance related policies and procedures.

25•Never treat compliance with provincial and federal regulations and company procedures as a

“nice to do.”

26•Educate yourself about your responsibilities as an insurance professional and become

knowledgeable about compliance and market conduct rules and regulations.

27•Never make disparaging remarks about another company or misrepresent your authority to

make a sale.


3.0 AGENT LICENSING & CONTRACTING WFGIA complies with suitability guidelines that cover both screening for suitability and reporting unsuitability of new and existing insurance agents or agents. The protection of the integrity of the insurance business across Canada requires that life agents be screened for suitability, to make it harder for those very few rogue agents to perpetrate unethical and illegal practices. The appointment of new agents is a joint effort between WFGIA and its sponsoring life company, Transamerica Life of Canada. By taking appropriate steps together we ensure that we attract and contract high caliber individuals to our organizations. 3.1 CONTRACTING AND LICENSING PROGRESS When applying for a WFGIA contract the agent’s name and code must be shown on the application.

All requests for a WFGIA contract must include the following:

A fully completed Application for Contract A signed Authorization and Consent Form Copies of all licenses held by the applicant A copy of the applicant’s E&O Certificate (obtained through WFGIA) Declaration of Outside Business Activities (OBA)

Note: before an individual can solicit or sell insurance products they must obtain a life insurance license and be granted a contract by WFGIA. The WFGIA Licensing and Contracting Department manages this process. To be offered a WFGIA contract, all applicants must meet the following standards for appointment:

Fully discloses all material information including conflicts of interest and outside business activities and occupations on the Application for Contract,

Have a favorable credit standing, Have no record of criminal activity or serious regulatory infractions, Receive a favorable rating from other companies, and Meet the regulatory requirements of holding a valid license(s) and E&O

Insurance. Agree to abide by this guide and the WFGIA Policies and Procedures and code of

conduct

WFGIA will grant an insurance contract only to those individuals whose background and past record reflects merit upon the industry and demonstrates a strong professional and ethical background. In the event an applicant does not meet this standard, the decision not to offer a contract may be appealed. Appeals should be directed the WFGIA Licensing and Contracting Department.


3.2 UPDATING LICENSING INFORMATION It is the responsibility of every licensed individual to notify the WFGIA Licensing and Contracting Department within five (5) days whenever there is a material change or immediately when the agent wishes to seek Outside Business Activities (OBA). Insurance agents may be asked to complete a WFGIA Insurance Agency of Canada Inc. Annual Questionnaire to confirm that there have been no changes in an individual’s status and that the individual continues to abide by the stated policies in section 3.1 .


4.0 SALES COMMUNICATIONS 4.1 SALES COMMUNICATIONS – DEFINED Sales communications consist of practically anything shown to the public. This includes newspaper advertisements, presentations (PowerPoint or-similar programs), sales brochures, business cards, letterhead, direct mail, correspondence, newsletters, websites, Facebook, billboards, videos etc. Even freehand drawings you might show or leave with a client on a sheet of paper may be considered to be a sales communication. In essence it covers what you present to the client and how you hold yourself out in making the presentation. Any presentation that you produce on your own, using PowerPoint or other software program, or that is produced in some other form, must contain WFGIA’s name or logo and must be approved by WFGIA Marketing or Compliance in advance. Also, you are required under the Provincial Insurance Acts to be properly licensed at all times for each product you sell. This applies to your province of residence and to any province in which you conduct business on a non-resident basis. Severe penalties exist for operating without a license. How you “hold yourself out” to the public on business cards, letterhead, or any document in which you use your name and occupation is also covered under provincial regulations. It is a breach of the regulations to describe yourself or the services you provide in a manner that could be construed as misleading. The public must understand what you do, what products you sell and who you represent, to avoid misconceptions. Regulators are concerned that the public will be misled if clients do not clearly understand this information. Any sales communications or marketing materials prepared by you must be prior approved by WFGIA to make sure the information is clear, accurate, and does not include terminology that tends to exaggerate, or contain other potentially misleading information. The Provincial Insurance Acts contain provisions dealing with the use of “false or misleading statements” as to the terms, benefits or advantages of any contract or policy of insurance issued or to be issued.” Such statements can be construed as an unfair or deceptive practice and lead to severe penalties under these Acts. The best way to safeguard yourself and your clients or prospective clients is to always use materials approved for use by WFGIA or by the company whose product you are selling. It is improper to call a life insurance policy a plan or program. Calling a policy by a name that hides or disguises that it is life insurance is misleading. When considering the accuracy of statements, pay attention to the context in which they are used, the audience they are used with and the overall clarity of the communication. The potential complexity of the proper use of a term is one reason why you should always use sales materials that have been approved by the company.


When you provide information on tax related matters (e.g., tax deferral) you must disclose that the client's specific financial situation will determine tax status and that he/she should always check with his/her tax agent? Tax related matters require specific disclosures. Whenever you mention terms such as “tax-deferred,” “tax-free,” “tax-advantaged” or “non-taxable” you must provide a detailed description of how tax status is maintained or affected. In addition, you should provide a disclaimer such as “Only a thorough review of your specific situation can determine if there are tax advantages available to you through our products. You should consult your tax agent or lawyer about your specific situation.” Tax matters are complex and not providing proper disclosure and disclaimers may expose you to significant liability if the proposed tax status is incorrect. Clients may fail to disclose important tax-related information or fail to advise you if their tax status changes. To protect yourself and reduce your liability, you should always use the proper disclosures and disclaimers. Use of the term “tax-free” is potentially confusing to a client and must be avoided unless the taxable status or tax treatment of the case in point is truly tax-free. “Tax-advantaged” is usually a preferable term from a compliance standpoint.

4.2 SALES COMMUNICATIONS, GENERAL APPROVAL REQUIREMENTS Materials must be submitted to WFGIA for review and approval well in advance of the proposed use date (recommended minimum is two weeks). Note that some materials can only by submitted by CEO’s. Approved advertising and sales material aimed at consumers will be subject to the following limitations:

If any material fact within an approved piece changes, that piece is no longer approved and must be withdrawn from use immediately. If continued use of the piece is desired, it must be revised and resubmitted for WFGIA approval as soon as possible;

If materials are edited after they have been approved, then resubmission is required;

In addition to the requirements of this policy and/or conditions attached to approvals, applicable laws governing the use of WFGIA information and WFGIA advertising, marketing and sales materials, logos, trademarks, and service marks shall apply;

Materials are only approved for use with the audience and in the medium disclosed at the time of the review. For example, if advertising copy is approved for use on a CD-ROM disc that will be distributed only to consumers, the approved wording may not be used with consumers or on a Web site without prior Company approval for such additional or different use.

4.3 ALL SALES COMMUNICATIONS Advertising is defined as any action that calls a product or service to the attention of the public. For purposes here, we are referring to advertising as all sales communications and paid announcements that include, but are not limited to, the following:


Advertising in trade and consumer publications (including materials used to

recruit agents); Radio, television, outdoor media advertising, or public announcements; Any communication for which a placement fee is paid, regardless of whether it is

a solicitation for insurance, recruiting, or sponsorship of an event; Advertising transmitted by telephone, fax, or computer (via the Internet, email, or

other means).

4.4 UNSOLICITED EMAIL AND FAX ADVERTISING The Personal Information Privacy and Electronic Documents Act (PIPEDA) and substantially similar provincial privacy legislation contain limitations and restrictions on how you may solicit business. If you are considering the use of email, fax or any other mass distribution method of soliciting business, you must comply with the provisions of all applicable privacy legislation. Please refer to WFGIA’s Privacy Policy for more details on the PIPEDA and applicable provincial privacy legislation, their restrictions, and the actions you must take to comply with their provisions. Fax and email advertising to consumers contracted through you, including broadcast faxes, is not considered “unsolicited” since there is an existing business relationship between you and the recipient and/or the email/fax is sent at the request or with the consent of the recipient. 4.5 TYPES OF MATERIALS THAT REQUIRE APPROVAL Prior to printing or publication, submit all advertising materials for all media for approval, including but not limited to:

Advertisements for newspapers, magazines, industry publications, radio, television, telephone, computer, and outdoor advertising (i.e., billboards, bus placards, etc.); Agents can acquire a website by following the marketing steps available on WFGIA online. Only websites created, reviewed and approved via this process will be approved.

All texts and materials in any media, regardless of the subject matter (i.e., insurance, annuities, recruitment, etc.);

Advertising messages designed to be delivered by automatic telephone device, fax, or computer;

Advertising that is based upon material furnished by WFGIA. This includes using an WFGIA supplied item in a different medium (e.g., using a local-level mailer as the basis for a newspaper ad);

Brochures, flyers, descriptive literature, broadcast faxes, sales aids, direct-mail letters, newsletters, postcards, reply cards, illustrations, and form letters for all types of presentations to the public and agents;

Prepared sales and training presentations, seminar and telemarketing scripts or pitches (including scripts for “on-hold” messages), video and computer presentations, or slide or video shows designed to communicate information about WFGIA, its affiliates, their products, programs, or practices; and


Any material designed to create interest in WFGIA or its affiliates’ products or programs, an agent, or to induce the public to subscribe to the WFGIA service. Such material may include, but is not limited to, items to be used for lead generation, sales promotion, agent recruiting, agent training, informational updates, newsletters, and direct mail.

4.6 REQUIREMENT TO APPROVE Even though a WFGIA Agent may be targeting a local audience, the Internet is a global medium and individual access to most sites cannot be controlled. Therefore, WFGIA places certain restrictions on the information included on a Web site or in other Internet marketing resources and may require certain disclaimers, when WFGIA or its affiliates’ names, logos, or other proprietary information are used, or when WFGIA and its affiliates’ products are referenced. It is essential that all advertising and marketing communications programs and materials to appear on the Internet be approved by WFGIA prior to posting online. 4.7 APPROVAL REQUIREMENTS Hard copies of proposed agent Web sites or other Internet marketing communications must be submitted to WFGIA well in advance of the proposed launch date. (a minimum of two weeks prior is required) This includes Web site copy and other content designated to communicate or promote an interest in WFGIA and/or its affiliates’ products, programs, services, or awards. (Please note: It is to the agent’s benefit/advantage to submit Web site copy for review and approval before it is converted to HTML code, as the costs associated with making changes to copy already converted into HTML code can be expensive.) Please provide the proposed web site address with your submission. While WFGIA logos, trademarks and other corporate graphics may currently be used on an agency site, advance written approval is nonetheless required for each subsequent use. WFGIA considers context to be a significant consideration in the review of proposed marketing material. Any posting of non-approved WFGIA or product information on an agent Web site is considered to be non-compliant advertising. In such cases, appropriate action will be taken including, if necessary, termination of an agent based on the terms and conditions contained in the WFGIA Agent Service Agreement. In addition, please note the following: • Lifting elements from WFGIA and its affiliates’ brochures and print material is not an acceptable form of advertising. As the Internet is an immediate medium, the content of sales literature and disclosure documentation, including product information can become dated quickly. Legal approvals are based on the entire copy of a given document; even minor changes or lifted copy excerpts can result in non-compliant advertising. Therefore, all material must be approved by WFGIA prior to use, even when the source is an WFGIA and/or its affiliates’-produced document. 4.8 CORPORATE STANDARDS FOR BUSINESS CARDS AND LETTERHEAD


This document describes WFGIA’s corporate standards for how agents of WFGIA may present themselves to consumers and others, using business cards and letterhead. The primary purpose of a business card or personalized letterhead name is to identify the individual agents association with WFGIA. It is also intended to indicate the individual’s regular title or designation and his/her qualifications for the business. WFGIA’s policy is based on this premise and also incorporates provincial regulatory requirements. Most provinces in Canada have provisions under their respective Insurance Acts that do not permit an agent to advertise or carry on business in any name other than what appears on his/her license. For instance, if the license is issued with the name “James Snow,” the individual may not use the name “Western Insurance Services” or any other similar trading name, where the restriction exists. WFGIA will apply this ruling to all business card and letterhead requests and agents who print their own should be aware of and comply with this regulation by seeking prior approval from WFGIA. I. BUSINESS CARDS (A) REGULAR DESIGNATIONS (OTHER THAN QUEBEC) Only the following designations are appropriate for use by agents and others:

Life Insurance Agent Life Insurance Salesman/Saleswoman/Salesperson Insurance Sales Representative Life Insurance Sales Representative Insurance Salesman/Saleswoman/Salesperson Insurance Agent Licensed Agent Life Insurance Agent or Life Agent

Note: In Ontario, use of the term “Broker” or any form thereof is restricted to those agents’ whose licenses are issued under the Registered Insurance Brokers Act of Ontario. Use of this designation by others is not permitted. (B) REGULAR DESIGNATIONS (QUEBEC) Note: The following designations are current as of the present time. Agents must use designations related to all financial services licenses they hold and only as follows:

Life Insurance – Financial Security Agent Mutual funds – Group Savings Plan Representative or Mutual Funds

Representative

All business cards and stationery must be in French only or French and English. English only cards and stationery are not permitted. For dual licensed agents, business cards will be printed on both sides showing the information relative to the securities activities and the information relative to the insurance sector on the other side.


(C) PROFESSIONAL DESIGNATIONS Professional designations are granted through a professional organization, such as Advocis , Canadian Securities Institute and the Financial Planning Standards Council. If the abbreviated form is used, it will be placed beside the individual’s name. If the full title is used, it is to be placed under the individual’s name. Either or both may be selected. For agents using WFGIA business cards, use of any designation not in the following list must be approved by WFGIA:

Chartered Life Underwriter (CLU) Registered Life Underwriter (RLU) Chartered Financial Consultant (CH.F.C.) Canadian Investment Management (CIM) Chartered Financial Analyst (CFA) Registered Financial Planner (RFP) Fellow of the Life Management Institute (FLMI) Chartered Accountant (CA) Certified General Accountant (CGA) Certified Management Accountant (CMA)

Note: Except for those qualified to use the designations set out above, the use of titles or designations such as Financial Security Planner, Financial Planner, Financial Planning Consultant, Financial Counselor, Retirement Consultant, Retirement Counselor, Retirement Specialist, Investment Agent, Investment Counselor, Investment Specialist and other similar designations are not permitted. II. LETTERHEAD (INCLUDING FAX COVER SHEET)

All of the requirements of these standards apply equally to letterhead. In addition, the following requirements should be noted. The information about titles and other designations included on personalized letterhead or fax cover sheets must match the information shown on business cards but some of the information on the business card may be left off the letterhead or fax sheet. For agents of WFGIA, if the letterhead or fax cover sheet contains information not shown on the business card, WFGIA must approve it. (A) NAMES Only one name may appear on a business card or letterhead and it must be the name that appears on the life license. (B) EMAIL ADDRESS Email addresses may be used on business cards and letterhead (WFGIA e-mail addresses only). (C) DISCLOSURE


https://www.fpsc.ca/


Although not specifically required to be preprinted on letterhead, many provinces require that an agent disclosure be provided to clients and prospective clients in writing, before conducting business or giving advice. Please refer to the section 2.0 on Ethical Conduct for details on how to comply fully with this requirement. Agents are expected to be familiar and comply with the specific requirements for the province in which they are conducting business (including non-resident provinces).

(D) MISCELLANEOUS The following should be noted:

Personal photos may not be used on WFGIA business cards or letterhead. Logos or insignia other than those specifically provided for in this document are

not permitted. Years of Service may not be shown on business cards or letterhead. Many of the requirements contained herein apply equally to advertising and

agents are expected to follow them when placing personal ads. They also apply to customized presentations made to clients or prospective clients being applied for. “TAKIN


PULS

5.0 COMPLAINT HANDLING PROTOCOL 5.1 PURPOSE The purpose of this protocol is to define the process to be followed by WFGIA in dealing with all market conduct complaints. 5.2 DEFINITION AND SCOPE A market conduct complaint is any complaint that brings into question the actions of agents in regard to his/her conduct in connection with the sale, sales development or service of WFGIA approved insurance products. Complaints may relate to:

accusations of a criminal nature (forgery, fraud, misappropriation of funds), failure to comply with the Insurance Act or Regulations (acting without a license, disregard of replacement regulations, tied selling), accusations of unethical behavior (failure to put client’s interests ahead of his/her

own, misrepresentation, twisting, churning ), etc.

For clarification, “twisting” is the unethical act of persuading a policyholder to drop one policy in favor of another, solely for the purpose of selling another policy, without regard to possible disadvantages to the policyholder. It can also involve using the values, either through loans or through the redirection of dividends, of one policy to purchase another. “Churning” is generally confined to securities and commodities, but can occur with annuity-type contracts including segregated funds. It occurs when a life agent, exercising control over the volume and frequency of trades, abuses a client’s confidence for personal gain by initiating transactions that are excessive in view of the character of the account and the client’s personal objectives. Any complaint identified as a market conduct issue presents the risk of potential liability for the agent and WFGIA. This could lead to litigation or regulatory investigation, and result in financial loss, fines and adverse publicity. As such, market conduct complaints are serious and will be investigated thoroughly, objectively and expeditiously. Market conduct complaints may originate from policyholders, regulators or third parties acting on behalf of policyholders or who otherwise believe they have a vested interest in the outcome. They will normally be received in the WFGIA Head Office directly but may originate in a WFGIA branch office or the insurer. Head Office must be advised if a complaint originates in any field location or if contacted by a regulator, the police or the RCMP seeking information about an agent or anyone else.


5.3 PROCESS All market conduct complaints should be promptly referred to WFGIA’s Compliance Department, who will investigate the complaint.

Notice of the complaint will be sent and escalated to the life insurer involved as required in the National Account or MGA Contract with WFGIA.

The Compliance Officer will contact all the parties involved, and where necessary will request written statements.

The parties from whom reports may be requested include the client, the branch manager and the agent.

During the investigation, the Compliance Officer will keep the Chief Compliance Officer informed of developments and will communicate with other members of senior management as required, and will consult the legal department where necessary. All communications, verbal and written, are to originate from the Compliance Department. Also, it is prudent that the individual agent who is the subject of the complaint have no communication with the complainant at any time during the investigation. The Compliance Department is responsible for conducting a fair and objective investigation, dealing solely with the facts uncovered. Once completed, a report and recommendations will be presented to senior management who will decide on the appropriate action to be taken. Once a decision is made, the Compliance Officer will communicate it to the complainant. If the decision includes disciplinary action against the soliciting agent or any other field person, the CCO will communicate this in writing to the agent and their upline. Where the insurer takes control of the complaint, WFGIA will comply with and support the requirements of their complaint protocol. 5.4 TIMELINE The purpose of this timeline is to indicate the steps to be followed in resolving client complaints consistent with regulatory requirements. All timeframes are estimates and will vary with individual investigations: 3 Days – The Compliance Officer handling the complaint makes initial contact with all parties and confirms nature of complaint. Notice of the complaint is provided to the life company involved. Also, the errors and omissions insurance provider is notified immediately of the potential damage or claim.

25 days - Complaint resolution is communicated to the complainant or if not yet resolved, a notice is sent that additional time is required to complete the investigation and arrive at a final decision. This step may be executed in cooperation with the affected life insurance company.ING Y”


5.5 HANDLING COMPLAINTS IN QUEBEC The handling of complaints from clients domiciled in Quebec differs somewhat from the other provinces. This policy reflects the Complaint Protocol issued by the Autorite de Marches Financiers (AMF), concerning the examination of complaints and the resolution of disputes. All market conduct complaints should be promptly referred to WFGIA’s Compliance Department, who will investigate the complaint. Notice of the complaint will be sent and escalated to the life insurer involved as required in the National Account or MGA Contract with WFGIA. Further, the Compliance Officer will contact all the parties involved, and where necessary will request written statements. The parties from whom reports may be requested include the client, the branch manager and the agent. 5.5.1 PURPOSE OF THE POLICY The purpose of this policy is to set up an equitable examination procedure for all complaints received by WFGIA Insurance Agency Inc. It is intended in particular to govern the receipt of complaints, the sending of acknowledgements of receipt and notices to the complainant, the creation of complaint files, where applicable, the transfer of the complaint file to the Autorité des marchés financiers and the compiling of complaints for the purpose of preparing and filing an annual report to the AMF. 5.5.2 CONTROLLING THE COMPLAINTS The Compliance Department will ensure that this policy is properly administered and shall comply with the following procedures:

to send an acknowledgement of receipt of the complaint to the complainant to send the notices required to send the file to the AMF, at the complainant's request to maintain a Central Complaint Registry to file an annual report with the AMF

5.5.3 DEFINITION OF COMPLAINT For the purposes of this policy, a complaint is an expression of dissatisfaction which includes one of the following three elements:

A reproach against the regulated person (i.e. the Insurer, WFGIA, agent) The identification of real or potential harm that a costumer has experienced or

may experience A request for remedial action

Note: the expression maybe verbal/written. Written documentation must be obtained in order to proceed with our investigation. A first-level intervention consisting of a communication from a customer which is an informal step aimed at having a particular problem corrected, is not a complaint,

http://www.lautorite.qc.ca/en/index.html




provided that the problem is dealt with as part of the regular activities and without the customer having to request escalation of the complaint. These would include initial service and administrative issues. 5.5.4 RECEIPT OF THE COMPLAINT A customer who wishes to file a complaint must do so in writing (with the exception of Quebec, see Handling Complaints in Quebec). For initial contact only, a complaint can be sent to WFGIA Compliance. Written documentation must always be enforced. However, the email address may be used for internal inquiries. The Compliance Department must acknowledge receipt of the escalated complaint within five (5) business days. The acknowledgement of receipt shall contain at least the following information:

A description of the complaint received specifying the actual or potential harm, the reproach against the regulated person and the request for remedial action;

The name and contact information of the person responsible for examining the complaint;

In the case of an incomplete complaint, a notice to the effect that additional Information must be sent within 10 days, failing which the complaint will be considered to have been abandoned;

A copy of the Quebec Complaint Protocol; A notice informing the complainant of his right to request, upon the expiry of a

period of 10-20 days following receipt of all the information required or within one year following the response to his complaint, the transfer of his file to the AMF if he is dissatisfied with the response or the examination of his complaint. The notice shall also indicate that the AMF may offer mediation if the parties agree.

A notice reminding the complainant that mediation is an amicable conflict settlement process in which a third party (the mediator) intercedes with the parties to assist them in reaching a satisfactory agreement;

5.5.5 COMPLAINT FILE A separate file will be created for each complaint received. In addition, a separate complaint log will be maintained to track all complaints. The file shall contain the following:

The complainant's written complaint, including the (3) three elements of the complaint (the reproach against WFGIA, the insurer or the agent, the real or potential harm and the remedial action requested);

The outcome of the complaint examination process (the analysis and the supporting documents)

A copy of the WFGIA’s final response set forth in writing and containing reasons for the response


5.5.6 COMPLAINT EXAMINATION Upon receipt of a reportable complaint, the Compliance Department shall carry out an investigation. The complaint shall be examined within a reasonable time period of 10-20 business days following receipt of all the required information. After the investigation, the Compliance Department shall send the final response in writing, giving the reasons therefore. 5.5.7 TRANSFER OF THE FILE TO THE AUTHORITÉ DES MARCHÉS FINANCIERS

(AMF) If the complainant is not satisfied with the examination of his complaint by the Compliance Department or the outcome of the examination, they may request that their complaint file be transferred to the AMF. The complainant may exercise this right only upon the expiry of the maximum time limit allowed for obtaining a final response or no later than one year after the response has been obtained. The transferred file shall include all the documents regarding the complaint file.



6.0 SALES PROCESS & SALES ILLUSTRATIONS 6.1 THE SALES PROCESS The sales process consists of all of the steps needed to make the sale. It begins with introducing yourself as an insurance professional, and includes fact finding, analyzing needs, making a recommendation, closing, and ending with the client taking action based upon your recommendations. A sales process which is comprehensive avoids potential problems, and leads to better sales results. This section only addresses the face-to-face sales process. Always conduct a detailed fact-finding interview with your clients and prospective clients and make recommendations based on the results of you findings. Know Your Client Prior to your choice of product or course of action continually assess the level of sophistication and experience of the client, his/her dependence on or independence from your advice as an agent, and any other particulars of the client that may be pertinent to his/her insurance needs in recommending a course of action. It is essential that you “know your client” and find out as much as you can about them. As an insurance professional, your recommendations should reflect an understanding of the client's financial and personal needs, at least to the extent the client shared such information with you. The process used to reach the recommendation should be documented. The steps used should be identified, so that should the need arise to review the process; there is a “paper trail” that can be followed. The following are some of the more important categories of information you should collect for each client before making a recommendation:

Values and attitudes about financial matters, family, occupation, etc. Short and long-term financial and personal goals, objectives and needs Current and future personal circumstances; e.g., family status and general health

status Time horizon of when funds will be needed Financial situation including income, general expenses, debts, tax status, savings,

occupation, etc. Current personal and business insurance coverage Business interests and business-related issues

Products or services you are not licensed to offer can only be mentioned if you clearly identify that they should be provided by another professional. If the client does not have a professional you can provide a list of referrals they can contact that can provide these other products or services.


Do not give legal advice or assist in the draft or completion of legal documents such as wills, trust agreements or contracts. If your insurance recommendations have income or estate tax implications, you should advise clients to seek their own tax or legal advice. However, you should also provide disclosure of the conditions and qualifications that must be met to receive favorable tax treatment to the extent such discussion is a necessary part of the sales presentation. Be certain that you provide a full discussion of penalties that may be assessed in the event of early withdrawals. Explain the possible tax implications of withdrawals, policy loans, etc. that are relevant to the content of the presentation. Always suggest that the client have your recommendations reviewed by his/her tax agent. Emphasize that you can't give tax advice. You must provide balanced and complete information on the benefits, cost, limitations and contract terms of the products you present or recommend. You must disclose material facts which are necessary to prevent your statements from being misleading. Sales materials or presentations must provide all pertinent facts about the products and services presented or discussed with the prospect or client. Failure to fully disclose important details gives the appearance of a conscious desire to mislead or misinform the prospect or client. Comparisons between products and companies should be fair, balanced and accurate. General comparisons between different companies and their products can be made as long as the comparisons are balanced and complete. Consumers often perceive little difference between products and companies. They may therefore, interpret criticism of one product or company as criticism of the industry at large. Being excessively critical of other companies can appear unprofessional and create a negative image for both you and WFGIA. It is easy to create false impressions about the strength or weakness of a company based on ratings data alone. This can lead to possible charges of misrepresentation. (For more details on comparing illustrations see the Sales Illustrations section.) 6.2 SALES ILLUSTRATIONS - WHAT ARE THEY? An illustration is “any communication to a current or prospective client that shows numbers or graphs of future policy premium and/or values, or features that depend on them, for an individual life insurance policy.” This definition is extremely broad and taken in context; it goes well beyond the traditional ledger to encompass such things as:

Non-ledger (graphics, textual etc.) illustrations Advertisements Product brochures Product comparisons Concept illustrations Agent developed or third party illustrations Videos Price comparisons


Web sites

“Features” would include such elements as premium offset, cash withdrawals, interest rate guarantees, etc. Any concept illustration (e.g. buy term and invest the difference, retirement funding, etc.) must comply with illustration requirements. 6.3 ILLUSTRATION REQUIREMENTS Specifics that must be addressed in presenting illustrations to clients are clear: there must be full and accurate disclosure to the client or prospective client. Also, the language used in the illustration must be “clear and consumer-friendly.” Using any language that could be misinterpreted or difficult to understand must be avoided. The client or prospective client must end up with a dear understanding of what he/she has bought or is considering buying. Explain that the illustration is presented for information only, based on certain assumptions, and is not an estimate or prediction of future experience. If you show an illustration to a client, it is your responsibility to fully explain its meaning. Discuss the following:

The product being illustrated is a life insurance product whose primary purpose is to provide a death benefit.

The illustration is an example only and merely shows how the contract can work under certain sets of assumptions. It is not a contract or estimate of future results.

The policy has guaranteed and non-guaranteed elements.

Withdrawals, fees, penalties, etc. as well as limitations, will have an impact on the policy, which must be fully explained.

Explain that actual performance is extremely sensitive to changes in interest rates and show the leveraging effect this can have on results, downwards as well as upwards. It is the policy of WFGIA and most insurance companies whose products we distribute that the client or prospective client signs the illustration and that it accompanies the application. You should also give a copy to the client and maintain a copy in your files should questions arise after the sale. Illustrations can be powerful tools for making a sale. If you use only approved illustrations and explain them thoroughly, you are living up to your responsibility as an insurance professional. This policy on sales illustrations does not apply to individual annuities or to group coverage but does apply to segregated funds. 6.4 GUARANTEED VALUES OR FEATURES Where reference is made in the illustration to guaranteed values or features, they must be displayed in the illustration. The term “guaranteed” can only be used when the values or features to which it refers cannot be withdrawn or modified by unilateral action by the insurer and which are not dependent on future experience.


6.5 NON-GUARANTEED VALUES OR FEATURES All values, amounts, or features that are not guaranteed must be clearly identified as such. It follows that if values or features cannot meet the test of being guaranteed, they have to be identified as not guaranteed. The terminology, form and content of the illustration must not imply in any manner that non-guaranteed values or features are guaranteed. 6.6 ILLUSTRATION SCENARIOS Where non-guaranteed amounts are involved, the illustration must display at least two scenarios of illustrated results. And equally important, the general basis for each scenario and the key assumptions for each must be outlined in the illustration. This is one of the primary disclosure requirements for illustrations - the illustration must display at least two scenarios of illustrated results – a Primary and an Alternate – to provide the client or prospective client with a meaningful indication of the sensitivity of the results to variations to key factors, notably interest rates. Further, the key assumptions for selecting the Primary and Alternate scenarios must be outlined in the illustration. Most insurers’ illustration software complies with this requirement. 6.7 ILLUSTRATION IDENTIFICATION Each illustration must clearly indicate the following:

The date on which it was prepared The identity of the person for whom it was prepared The name of the agent and the insurer providing the illustration Each characteristic or assumed characteristic, essential in determining the

illustrated results: age, gender, and rate basis Standard/Preferred/Substandard, Smoker/Non-Smoker).

Each page or screen of an illustration must indicate clearly both the number of that page and the total number of pages in the document (e.g., “page x of y”).

6.8 CONCEPT ILLUSTRATIONS This Illustration policy applies equally to Concept Illustrations. We emphasize again that agents who choose to use third party software, or otherwise customize their illustrations must ensure it fully meets the requirements of this policy. Finally, WFGIA will continue to require that agents submit the specific illustration with each universal life application signed by both the applicant and the agent. This illustration must match the policy being applied for.


7.0 REPLACEMENTS The replacement of life insurance policies is a contentious issue that all agents must fully understand and comply with. Improper and indiscriminate replacements and especially TWISTING or CHURNING has resulted in severe fines being imposed on agents and their contracted life companies. Replacement regulations exist in every province and recent changes have led to the introduction of requirements for transparent disclosure to clients on the benefits and disadvantages of policy replacement. 7.1 WHAT IS A POLICY REPLACEMENT A “replacement of a contract of life insurance” means a transaction whereby life insurance is purchased in a single contract or in several related contracts by a person from an insurer and as a consequence of the transaction one or more contracts of the insurance are, rescinded, lapsed or surrendered, changed to paid-up insurance or continued as extended term insurance or under automatic premium loan, changed in any manner so as to effect a reduction in benefits, changed so that cash values in excess of 50 per cent of the tabular cash value of the insurance contract are released, or subjected to borrowing of any policy loan values whether in a single loan or under a schedule of borrowing over a period of time whereby an amount in excess of 50 per cent of the tabular cash value is borrowed on one or more contracts of life insurance, but does not include a transaction where, a new contract of life insurance is made with an insurer with whom the person has an existing contract of life insurance in furtherance of a contractual conversion privilege exercised by the person, a contract is replaced by an annuity, or a contract is replaced by group insurance. The replacement of life insurance contracts is a controversial issue. The provincial insurance regulators do not suggest that one type of product better suits the needs of a consumer to a greater degree than another product. The Life Insurance Disclosure Form (LIRD) (see below) has been designed to provide the purchaser of life insurance with the basic information they will require to make an informed decision when considering the replacement of one contract of life insurance with another. In the event a replacement, agents and the new insurer have a responsibility to comply with the requirements. 7.2 DUTIES OF AGENT It is the responsibility of the life insurance agent to ensure that any replacement of existing insurance occurs in accordance with the principles of “Interests of the Client” and “Needs of the Client” in insurance regulations and codes of conduct. This requirement, stated simply, is that the client’s interests and needs must be placed first. It requires the highest level of integrity and performance on the part of the agent, and that the agent is obligated to recommend the amount and type of life insurance that is best for the consumer’s circumstances. As each situation is unique, the process by which the replacement of life insurance occurs and the manner in which the advantages and disadvantages of replacement is illustrated


must be tailored accordingly. All aspects of insurance coverage will not be of significant relevance in each replacement situation. However, the responsibility to ensure that all significant information relative to the replacement is provided to the consumer prior to commencing with an application for life insurance intended to replace existing coverage rests solely with the agent. Submitting an application for new insurance prior to presenting the written comparison is not acceptable and may result in disciplinary action by the Insurance regulators. The client should be encouraged to ask additional questions following the joint review and discussion of the questions outlined on the Life Insurance Replacement Declaration. 7.3 DIRECTION If after consultation with the client, completion of needs analysis and review of existing coverage it has been determined that replacement of some or all of the existing coverage is in the client’s best interest, it is the agent’s responsibility to gather all the information required to prepare a written comparison. In addition to the Life Insurance replacement Disclosure (LIRD), the agent must prepare a written explanation of the advantages and disadvantages of replacing the existing policy. While the questions outlined on the LIRD serve as a guide to complete this summary of significant comparative information, it is equally important that the written explanation and comparison include all factors supporting both replacement and conservation. The format of the written explanation is left to the discretion of the agent. In complex cases, a comparative format with explanatory recommendations may be warranted and should be completed. However, in all cases the written explanation must be complete and comprehensive. A copy of the written explanation must be left with the client, along with a signed copy of the Life Insurance Replacement Declaration. A copy of the written explanation of the advantages and disadvantages must be signed by the client, and retained by the agent. A copy of the signed LIRD must be provided to the new insurer with the application. Some jurisdictions may also require the LIRD to be sent to the existing insurer. Agents should check the requirements of applicable statutes and by-laws. At the time of this writing, below you will find the requirements pertaining to replacing insurance contracts in each jurisdiction.


A photocopy or original of the Life Insurance Replacement Declaration, signed by the client, along with a copy of the written explanation of the advantages and disadvantages of replacement signed by the client, must be retained in the agent’s file and be producible by the agent to Council upon request. If the agent is currently operating under the supervision of a “Supervising Agent”, the written explanation of the advantages and disadvantages of replacement must also be signed by their supervising agent. This co-signed copy must be maintained by the agent for review by Council if requested. In all circumstances, it is essential that the agent advise his/her client not to cancel their existing coverage until such time as new coverage has been approved and is in force.

7.4 COMPLIANCE Where complaints received from clients indicates a replacement of insurance may not have been in the best interests of the client, or that the client was not provided with full information required to make an informed decision, the agent will be required to provide substantiated evidence and documentation which demonstrates that full and proper


disclosure was completed and presented to the client prior to the completion of a new application. This documentation must include, but may not be limited to, the Life Insurance Replacement Declaration and the written explanation of the advantages and disadvantages of replacement. Non-Compliance with these requirements could subject the agent to the penalties set out in provincial insurance regulations. These regulations also define replacement, describe the agents responsibility when replacement of an in force contract is recommended by an agent or directed by the policy owner. It also provides the consumer with the right to withdraw the application and receive a full refund within 20 days of the date the completed disclosure statement was signed by him. Agents who recommend, or who are instructed by the policy owner, to replace a contract of life insurance should become familiar with their responsibilities under the regulation. The Life Insurance Disclosure Form must be completed prior to the taking of a new application. Legibility is a must when completing this form. If the information on the form cannot be read it is of little value to the client. Agents who do not present the form in a legible manner would not be in compliance with the regulation. For a sample LIRD Disclosure Document please see appendixes A.

8.0 INSURANCE OR CAPITAL NEEDS ANALYSIS Insurance regulation in various provinces requires that licensed agents analyze their client’s insurance needs before they complete a new insurance application.


This is a sound business practice to ensure the client’s needs are fully addressed and the products you recommend are suitable and appropriate.

Transferring risks through insurance is an effective risk management technique. Life insurance provides protection from loss of income that arises from premature death. Income, for the purposes of a needs analysis, can be identified in term of cash flow required by surviving spouses and children to offset immediate, ongoing and future living expenses needed.

8.1 COSTS ASSOCIATED WITH PREMATURE DEATH 1. Immediate costs – known as final expenses include funeral expenses,

probate fees and taxes, debt payments, mortgages and establishing an emergency fund for agents.

2. Ongoing expenses required to provide an income for living expenses 3. Future expenses including funding of future educational needs.

8.2 DETERMINING THE RIGHT AMOUNT OF INSURANCE Insurance needs analysis, also known as “Confidential Questionnaire” or “Fact Finder” will identify:

Your client’s financial goals and objectives

Your client’s short term needs (capital required due to early death)

Your client’s long term needs (retirement planning)

8.3 HOW IS THE ANALYSIS DONE What's required for a Financial Needs Analysis? In fact, it is so important that it is legislated that all advisers MUST do a needs analysis before presenting any product or strategy to clients. To estimate the amount of life insurance required, an agent must be able to access (with the client) the cost that would be incurred by the premature death of the proposed life insured. This can be determined in a fact finding interview with the client that includes a needs analysis.

Information gathered includes you’re client’s: Personal details

Current assets and liabilities

Income less expenses to determine any available income or cash flow available to work with.

Financial needs that need to be addressed and the order of their importance. Factors such as emergency funds, life and disability insurance, retirement capital, short-term insurance, a Will and so on.

Schedule of current insurance policies and investments


Beneficiary nominations.

Realistic assumptions as to future inflation and interest rates.

There are a number of distinct methods to determine the amount of life insurance that is appropriate for an individual client. Many tools are provided free to agents by life companies with which they are contracted. A simple insurance needs analysis that can be completed manually is attached to this Guide as Appendix. C. Regardless of the tool used, remember that it is your responsibility as a licensed agent to do a needs analysis for every insurance client and that copies of the analyses are keep in the client’s insurance file. Insurance regulation in various provinces requires that licensed agents analyze their client’s needs before they complete a new insurance application. This is a sound business practice to ensure the client’s needs are fully addressed and the products you recommend are suitable and appropriate.

9.0 SEGREGATED FUNDS

9.1 KNOW YOUR SEGREGATED FUND CLIENT WFGIA guidelines for marketing segregated funds require insurance agents to complete and maintain a record of client contacts, a “Know Your Client” document, and trade


confirmations for all segregated fund clients. The Leveraged loan disclosure and limited trading authorization or Power of Attorney (POA), where applicable, is also required.

Note: The marketing of mutual funds is subject to specific regulation by the Mutual Fund Dealers Association (MFDA). The marketing of segregated funds is regulated but is not subject to specific regulations similar to the MFDA. Mutual funds and segregated funds are similar in design and performance. The single notable distinguishing feature is a guarantee of the principal component of segregated funds.

Regulators are obligated to regulate in the interests of the consumer. From their perspective, it is not appropriate to have significantly less oversight in the marketing of segregated funds than is mandated in the marketing of mutual funds. The WFGIA policy for the sale of segregated funds is consistent with provincial insurance regulation and its purpose is to alert and inform agents about possible misconduct issues.

Provincial insurance regulations require that agents’ operational and trade practice activities in the sale of segregated funds be ethical. These regulations, further, stipulate that an agent may be guilty of misconduct if the agent:

fails to reasonably ascertain through prudent fact gathering a consumer's insurance needs.

fails to ensure that a consumer or insurer is fully informed of all relevant information that will allow the consumer or the insurer to make an informed decision.

fails to reasonably carry out a consumer's lawful instruction. fails to maintain proper records. fails to follow sound business practices.

A life insurance agent is a professional and has a fiduciary duty when dealing with clients. This high standard will be applied when considering the conduct of an agent. 9.2 PRIORITY OF CLIENT’S BEST INTEREST In the sale of investment products a high level of competence, knowledge, care and skill is expected from licensed agents. If that is not evident an agent may be held to not have acted in the best interests of the consumer. Agents selling segregated funds must learn the principals of investing and in particular the concept of asset allocation. The client is relying on the expertise of the agent to provide knowledgeable advice on the investment products being offered. KNOW YOUR CLIENT (KYC) Segregated funds are investment products and as such a properly completed know your client document (KYC) is an essential part of determining a consumer's needs. A KYC document must assess four critical factors respecting the consumer, and they are:

The consumer's investment time horizon; The consumer's risk tolerance;


The consumer's investment knowledge; and The consumer's investment objective.

An effective KYC document should as well provide important information respecting the consumer that will provide a compliance person with sufficient information to assess the product being recommended to the consumer. 9.3 FULL DISCLOSURE An agent recommending a segregated fund has an obligation to disclose clearly in terms easily understood by the consumer the nature of the underlying investments being recommended. Where the underlying investment in the segregated fund is equity based the agent must ensure that the risks of equity investing are clearly explained and understood by the client. When an agent recommends and or puts in place a leveraged loan strategy, the agent must ensure through proper disclosure documents that the risks of borrowing have been fully disclosed and acknowledged by the client. An agent will be expected to be able to demonstrate that proper fact finding has been undertaken to confirm that the consumer has sufficient financial resources to make the interest payments and/or meet a potential margin call. If surrender charges apply these must be disclosed in a form that is easily understood by the consumer. Whenever disclosure is required a signed acknowledgement of the disclosure document must be obtained from the consumer. A signed copy must then be given to the consumer and a signed copy kept in the consumer's file. 9.4 EXECUTING CLIENT INSTRUCTIONS All lawful instructions from a client must be carried out, even when an agent disagrees with the client’s introduction. In the event an agent disagrees with the instruction of the consumer, the agent will be expected to have documented evidence of the advice given and the reason for it. 9.5 PROPER BOOKS AND CLIENT RECORDS An agent must maintain proper records of all segregated fund client transactions. These include:

A record of client contact or application form A current signed copy of a KYC document including risk assessments and

recommendations made to client. A signed leveraged loan risk disclosure document if applicable Proper documentation evidencing trade instructions and confirmation of trades Where verbal instructions are given, additional written confirmation is strongly

advised, unless calls are recorded and retained for future reference. Log communications and discussions with clients.


9.6 MGA SUPERVISION POLICY The WFGIA Compliance Department will be responsible for overseeing segregated fund transactions and implement and enforce policies and procedures for account opening and trade supervision to satisfy regulatory obligations. The Chief Compliance Officer is the designated person from WFGIA responsible for the overall management and supervision of the agency. The designated person or branch manager will be able to demonstrate to regulators that a reasonable level of oversight of agents’ sales of segregated funds is in place based on detailed compliance policies and procedures outlined in this compliance guide, including but not limited to:

all new segregated fund transactions will be reviewed by the designated person to ensure that they are suitable for the client. KYC will be reviewed as well as product selection to ensure consistency with the client’s stated risk tolerance and objectives.

for leveraged loan strategies, the designated person will need to see, in addition to the KYC, the completed loan disclosure document setting out the risks of the leveraging strategy and the agent leverage worksheet that demonstrates the consumer can safely handle any payments that may become necessary.

the designated person will need to satisfy himself or herself that the agent has a record keeping system that will provide a record of client contact, discussions, agent recommendations, and any mandatory point of sale disclosure documents that may be required.

WFGIA agent’s contract contains compliance provisions requiring agents keep proper records as outlined above 9.7 POINT OF SALE DISCLOSURE Implementation of New Requirements for Segregated Funds: On January 1, 2011, new requirements went into effect for segregated funds. The new requirements relate to disclosure at the time the client enters into the segregated fund contract. The key requirements are as follows:

The Information Folder must be delivered to the client before he or she signs the application for the segregated fund.

The Information Folder must contain a Key Facts document that briefly describes the key features of the contract.

Fund Facts documents for each segregated fund available under the contract must be delivered with the Information Folder.

The client may choose to receive these disclosure documents either physically (in person, mail, or fax) or electronically (e-mail or viewed by the client on-line).

The client must sign acknowledging receipt of these documents. This requirement is unchanged but the acknowledgment may be modified to include a reference to the Fund Facts documents.

The insurer must offer a two-day rescission right (i.e., free exit) that applies to the decision to enter into the contract and/or any fund selection.


10.0 LEVERAGED INVESTING 10.1 WHAT IS LEVERAGING? Leveraging consists of borrowing money for investment purposes. This allows clients to make a larger investment than if they only draw on their own savings.


Borrowing to invest can involve significant risk. Before you recommend a leverage strategy to any of your clients:

Provide and review documentation given on the risks of this strategy. Determine the client’s tolerance for risk. Make sure they fully understand and

have evaluated the risks of borrowing to invest and that this strategy fits into their risk profile.

Make sure that their investment horizon is long enough (5 to 10 years minimum). Make sure you fully explain the tax impact of this strategy. Make sure the loan amount can be repaid without having to sell their investment. Make sure they understand exactly how much money they could lose in a worse-

case scenario. For example, would they be able to handle a 30% decline in the value of their investments?

Note the main points of conversations with your client so you can refer to them if necessary. Before recommending leverage strategies to your clients, make sure you have verified that they:

Have a medium to high tolerance for risk. Have the required knowledge. Normally, they should already be familiar with the

financial markets and have a certain amount of investment experience you recommend they adopt this strategy.

Have long-term financial goals. Have the required liquidity. For example, if they are having problems making

payments on their loans (mortgage, credit cards, etc.), leveraging is not for them. Are able to repay the loan. For example, if their investments decline in value, the

financial institution that loaned them the money may call the loan. Are in a healthy financial position. Have a high tax rate. One of the benefits of the strategy is that the interest may

be deducted from their gains for tax purposes. The higher their tax rate, the more significant this benefit becomes. The tax benefit should not be the only reason for using this strategy.

SOME OF THE PRECEDING POINTS ARE DISCUSSED IN GREATER DETAIL BELOW: They have a medium to high tolerance for risk - They should be comfortable with the risk of borrowing for investment purposes. This strategy is not appropriate for conservative investors, whose profiles call for investments with a low level of risk. This strategy is more suitable for investors with long-term investment horizons (5 to 10 years). It is not suitable for older investors or those approaching retirement who seek to maximize income and preserve capital. Tax rate is fairly high. Borrowing money to purchase mutual funds or a segregated fund is particularly suitable for investors with fairly high tax rates because the interest payable on the loan is tax deductible. However, borrowing is not necessarily a good strategy based


solely on tax benefits. They should not consider only this criterion when deciding whether or not to use leveraging. Healthy financial position - They should be able to repay the loan in addition to the interest stipulated in the loan agreement. Generally, a loan for the purchase of an investment should not exceed 30% of your net worth and 50% of your net liquid assets. For example, if your net liquid assets total $200,000, you should not take out a loan for more than $100,000. Required knowledge – Your client’s need to be aware of the risks associated with borrowing for investment purposes. When they use leveraging, the value of the securities purchased could decline and be lower than the value of the loan. They may be required to incur losses according to the terms of the loan. Furthermore, if they rely on the return generated by the securities they have purchased to cover the cost of the loan; they may be unable to repay the loan. Once they have taken out a loan - Advice your clients to notify you if their financial position changes. For example, divorces, loss of employment or retirement are events that should prompt them to review the suitability of leveraging. Monitor interest rates because when they rise, the cost of borrowing usually increases. Why do some people borrow for investment purposes? They have trouble saving. However, when they borrow, they have an easier time repaying their debts because they are obliged to do so. Borrowing to invest forces them to save.

They want the potential to earn higher returns by assuming higher risk.

They want to benefit from the fact that interest paid on the loan can be deducted from any gains for tax purposes (with exceptions such as borrowing to contribute to a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA).

The drawbacks of borrowing for investment purposes: Using this strategy may involve several risks:

The return on their investments may be lower than the borrowing rate (after income tax is taken into consideration).

Investments may lose value.

Their financial institution may demand repayment of the loan if your investments lose value. For example, if you borrow $100,000 to purchase an investment that declines in value and is worth no more than $60,000, the financial institution may demand that you immediately repay all or part of the loan.

Conclusion, taking only the amounts accumulated into consideration: When total returns are high, leveraging enables clients to accumulate more wealth than would be possible simply by investing available amounts. On the other hand, when returns are low or negative, it is best not to use leveraging.

http://www.lautorite.qc.ca/en/rrsp.html

http://www.lautorite.qc.ca/en/tsfa.html


10.2 AGENT LEVERAGE TOOL KIT The purpose of this guide and attached worksheet is to assist you, the agent, in determining if the recommendation of borrowing to invest meets the leveraging guidelines. The guide will:

summarize your obligation to your clients with regards to introducing leverage, explaining the risks of leveraging, using the worksheet and submitting the application for compliance approval

assist you in the process and expectations of WFGIA when you are recommending borrowing for investing – it is not a training program to educate you on the concepts of leveraged investments.

Please note that as an agent who recommends borrowing to invest, you must have already completed the WFGIA Leveraging Course and have done your own self training to fully understand these recommendations. In addition, you are expected to be familiar with the WFGIA’s leveraging parameters. See appendix “B” for WFGIA Agent Leverage Worksheet. 10.3 INTRODUCING LEVERAGE TO CLIENTS Borrowing money for investment purposes is not suitable for everyone. Prior to making this recommendation to a client you must first determine if the client has the proper investment knowledge, risk tolerance, and financial objectives to meeting the parameters of the WFGIA leveraging guidelines. It is imperative that you provide the client with a balanced presentation of the leveraging strategy and other investment options available. You must be able to demonstrate (through your client notes and financial plans) that the client was given the appropriate information to make an educated decision to borrow money for investing. A balanced presentation would include explanations regarding different account types (RSP, TFSA, Open) as well as concepts such as dollar cost averaging and compounding interest. 10.4 EXPLAINING THE RISKS OF LEVERAGING The new Leveraging Disclosure document must be provided to your clients at the time your client is opening a leveraged account. This disclosure document explains in plain language the risks associated with borrowing to invest. However, it is your duty to review this disclosure fully with your clients. It should be documented in your client notes that the risks have been reviewed and note any specific questions your clients may have had during this discussion. 10.5 EXIT STRATEGY In addition to reviewing the risks in the disclosure document, you must also review an “exit strategy” with your clients. Generally the exit strategy includes a review with the client as to what would be involved with surrendering the account and repaying back the loan under certain circumstances. Worst case scenarios should be reviewed. For example, should there be a loss of income, can the clients continue to meet the payment requirements with other resources. If not, are they prepared to repay the loan even if there is a shortfall?


10.6 LEVERAGE REVIEW WORKSHEET INSTRUCTIONS This worksheet is intended for the use of the agent and branch managers for the preapproval of the leverage recommendations. It will also assist you in assessing the suitability of existing leverage in accounts and if an additional loan falls within the parameters. The worksheet is an essential part of the preapproval process. If fully and properly completed the worksheet will help accelerate the approval process and minimize additional inquiries from operations and compliance. You are able to populate the shaded areas of the worksheet; the rest of the spreadsheet is locked. The worksheet completes the calculations to confirm if the parameters of the leveraging guidelines are being met. You must add your notes into the worksheet on page two. These sections ask you to detail what information you considered in order to determine the risk tolerance and investment knowledge. If the client holds current investment loans, or invested money from a HELOC you must enter the current balance of these loans in section 4. Section 6 will then calculate how the current loan meets the parameters and how the total leveraged amount held by the client meets the parameters. Please note that the entire leveraged amounts held by the client(s) must fall within the recommended parameters. Should a loan fall outside of the parameters, you, as the representative must advise in the comments section as to why the loan is suitable and an exception should be considered. 10.6 SUBMITTING THE LEVERAGED ACCOUNT FOR APPROVAL All documentations must be submitted to your branch manager for review and approval prior to sending it to WFGIA Dealer Connect for processing. Once the Branch Manager has reviewed and approved the leverage recommendation, all documentation should be sent to Fundex for processing. Fundex will provide all documentation to WFGIA Head Office Compliance for approval. The leverage recommendation file should include:

the new account application form/ KYC form applicable at the time of the leveraging recommendation;

the loan application(s). the Leverage Disclosure document documents supporting or pertaining to the client’s income (T-slips, notice of

assessment, etc.) financial plan(s); documents supporting or pertaining to the client’s net worth including account

statements, property tax assessments, appraisals, etc. client risk assessments or investor profile questionnaires; any marketing of the leveraged strategy or illustrations/ projections of investment returns or the future value of the account; notes of client meetings or discussions; and any other documents relevant to the review of the leverage strategy.



11.0 CONTINUING EDUCATION AND WFGIA 11.1 PRE-LICENSING TRAINING WFGIA INSURANCE OFFERING Leveraging Course

All newly licensed associates who intend to use leveraging strategies for their clients as of March 1st 2007 are required to take the WFG EI Leveraging Course or the IFIC Leveraging Course. Associates licensed on or after March 1st 2007 must successfully complete the course before they use leveraging strategies; the associates that were licensed within the one year period from March 1st, 2006 to Feb 28th 2007 must successfully complete the course within 1 year; while WFGIA Insurance strongly encourages all licensed associates to take the Leveraging Course, associates that were licensed before March 1st 2006 are exempt from taking this course unless the Compliance Department requires them to take it. Associates that do not intend to advise on leveraging will not be required to take the course. Regional Branch managers are required to monitor and keep records of all associates and whether they have passed or failed the course. This information should be readily available for review. 11.2 CONTINUING EDUCATION Each life insurance Agent is responsible for meeting the CE requirements of their respectful provincial regulators.

http://www.wfgei.com/


12.0 ANTI-MONEY LAUNDERING 12.1 INTRODUCTION

Money Laundering is generally defined as "any act or attempted act to disguise the source of money or assets derived from criminal activity." Essentially, money laundering is the process transforming money, produced through criminal activity, into 'clean money' whose criminal origin is difficult to trace. We are responsible to ensure that specific measures to detect and deter money laundering and terrorist financing are implemented throughout the organization. 12.2THE COMPLIANCE REGIME A compliance regime has been implemented at WFGIA Insurance. The Compliance Manager has been identified as the compliance officer responsible for overseeing the Anti-money laundering procedures and practices of the company. The Compliance Manager reports directly to Senior Management including the Chief Compliance Officer and the President of the company. A review of the compliance regime and AML/ATF policies, procedures and training will be conducted every two years or sooner if required by regulatory changes. Policies, procedures and training will be approved by Senior Management or external auditors if deemed necessary. 12.3THREE STAGES OF MONEY LAUNDERING Placement – criminal proceeds are deposited into legitimate organizations Layering – complex layer of financial transactions to make audit trail difficult to follow back to the crime Integration – seemingly legitimate proceeds are placed back into the economy 12.4 PROCESS FOR REPORTABLE TRANSACTIONS Each transaction or attempted transaction provides a potential risk for money laundering or the possession of terrorist property. WFGIA is required to make reports relating to the following transactions:

Transactions identified as suspicious of money laundering and/or terrorist financing;

The existence of terrorist assets; Large Cash Transactions An attempted transaction that is deemed suspicious


12.5 PROCESS FOR IDENTIFYING SUSPICIOUS TRANSACTION Generally items identified that may raise suspicion or warrant further investigation include (but are not limited to):

Frequent deposits and/or withdrawals from the same account or same client; Frequent deposits and/or withdrawals from accounts being serviced by the same

agent Frequent deposits and/or withdrawals from accounts that seem to held by

related people; Surrenders that suffer large DSC; Surrenders of large amounts shortly after deposits, specific to one clients'

accounts, or a few clients belonging to the same agent ; Suspicious trends that re-occur over a period of a few months either with the

same account, or agent Staff have been made aware of a large wire transfer into the trust account. Staff have been made aware of a large money order purchase

The following are examples of situations that may be deemed suspicious. The existence of one or more of these behaviors from a client may not confirm money laundering activities. However, these are suspicious indicators that raise concern regarding the integrity of the business being placed.

Client shows no concern for redemption charges Accounts are surrendered shortly after opening, with no reasonable explanation Client wishes to purchase a number of investments with money orders, traveler's,

cheques, cashier’s cheques, bank drafts or other bank instruments, where the transaction is inconsistent with the normal investment practice of the client or their financial ability;

Transfers of funds or securities between accounts not known to be related to the client;

All principals of client are located outside of Canada; Proposed transactions are to be funded by international wire payments, Staff is made aware that the client is associated with or working on behalf of

individuals believed or suspected to be related to terrorist financing activities. Normal attempts to verify the background of a new or prospective client are

difficult; Accounts that have been inactive suddenly experience large investments that are

inconsistent with the normal investment practice of the client or their financial ability;

Any dealing with a third party when the identity of the beneficiary or counter-party is undisclosed;

Client attempts to purchase investments with instruments in the name of a third party;

A specific Distributor's office or Agent requests the same or similar transactions on several accounts belonging to clients that seem to be unrelated.


12.6 PROCESS FOR REPORTING SUSPICIOUS TRANSACTIONS In accordance with FINTRAC procedures and the Proceeds of Crime (Money Laundering) and Terrorist Finance Act (PCMLTFA), any employee or entity that makes a report in good faith is protected from criminal and civil proceedings. FINTRAC applies a high standard of privacy protection to the personal information under its control. To promote privacy, PCMLTFA contains a number of provisions relating to the protection of information and privacy. It specifies the particular circumstances under which designated information may be disclosed by FINTRAC. In any other case, the Centre is prohibited, as are its employees, from disclosing any report received or any information. STEP 1 - IDENTIFICATION OF A SUSPICIOUS OR ATTEMPTED SUSPICIOUS TRANSACTION The following steps must be followed if you deem a transaction to be suspicious:

Bring the suspected situation to the attention of your manager. Complete a copy of the Suspicious Transactions Alert form. Document the details of the case, include time and date and the factors that you

have decided may be suspicious. Create a file, which must include copies of all applicable documents and the

Suspicious Transactions Alert form Provide the file to your manager for review.

STEP 2 – MANAGER REVIEW The Manager will review the file to ensure all applicable documents are included and that the Suspicious Transactions Alert form has been completed with all information available. STEP 3 – COMPLIANCE REPORTING TO FINTRAC The Manager will provide the file to Compliance for reporting and filing. If deemed necessary compliance report the transaction to FINTRAC as per the online reporting system. All files will be retained in the compliance department. 12.7 PROCESS FOR IDENTIFYING AND MONITORING PEFPS Effective June 23, 2008 securities dealers must include a risk assessment to identify high risk situations for money laundering and terrorist financing, where account holders might be politically Exposed Foreign Persons (PEFP). At the time of account opening all sales agents will be required to ask their clients specific questions to determine if the client is a politically exposed foreign person. An additional question has been added to the KYC/NCAF application to record this information.

A PEFP is

a head of state or government; a member of the executive council of government or member of a legislature; a deputy minister (or equivalent); an ambassador or an ambassador’s attaché or counselor; a military general (or higher rank); a president of a state-owned company or bank; a head of a government agency;


a judge; or a leader or president of a political party in a legislature.

A person would also be considered PEFP if any of the above apply to a family member such as:

mother or father; child; spouse or common-law partner; spouse’s or common-law partner’s mother or father and brother, sister, half-brother or half-sister (that is, any other child of the

individual’s mother or father).

Once a client is identified as a PEFP, the PEFP Verification Supplement must be completed and provided to head office compliance along with all account opening documentation. The PEFP status is recorded on the system for tracking. In addition the account must be approved by Senior Management prior to any transactions taking place. PEFP files are maintained in the compliance department.

12.8 PROCESS FOR IDENTIFYING POTENTIAL HIGH RISK CLIENTS It is the expectation of FINTRAC that a risk assessment is completed with each client in relation to the client’s business activities. Knowing clients is not limited to the identification requirements. The expectation is that there is an understanding of the activities, transaction patterns and how he/she operates. A client assessment should be completed where there is an ongoing relationship with the account holders. Client Business Relationship Checklist must be completed by the agent after the initial client meeting and maintained in the branch client file. The checklist should be updated as the client relationship develops and more information is known about the client. Should there be a concern with a specific client, this must be brought the attention of the compliance officer. Note that the questionnaire should not be completed with the client, but rather after the meeting. A client should not be notified if they are deemed as a potential risk. If a client is identified as a potential risk, the report must be provided to the compliance department. The compliance department will review and assess the risk. The requirement for further account monitoring will be considered. 12.9 PROCESSES FOR RECORD KEEPING Client identification must be verified on the New Client Application Form/KYC. This document is maintained in the client file as per the Compliance Procedure Manual. Information is also recorded in the back office system as required for account opening purposes. Identification kept on file must be kept up-to-date and reviewed at least every two years. Mutual fund dealers will be prohibited from opening an account if we are unable to establish the identity of the client.


12.10 BUSINESS OR COMPANY NAME ACCOUNTS When opening an account for a corporation, in addition to the New Client Account Opening Application, confirmation of the officers who are duly authorized to act on behalf of the company must be obtained and maintained in the client file. This can be any one of the following: the certificate of incumbency, the articles of incorporation or the bylaws of the corporation. You also have to determine the names of the corporation's directors. To do this, you may need to see the list submitted at the time of their application for incorporation. The record you use to confirm a corporation's existence can be paper or an electronic version. An electronic version of a record has to be from a public source. For example, you can get information about a corporation's name and address and the names of its directors from Industry Canada's Strategies federal corporations database on the Corporations Canada page of the Strategies Web site (http://strategis.ic.gc.ca). If the account is for an entity that is not a corporation in addition to the New Client Account Opening Application, the name address and principal business or occupation of the entity must be recorded. To confirm the existence of an entity other than a corporation, refer to a partnership agreement, articles of association or any other similar record that confirms the entity's existence. Copies of all documents or internet searches must be maintained with the client file with additional copies submitted with the account opening documents for processing In both cases the Directors/Beneficial Owners of Corporations and Non-Corporate Entities Form, must be completed, please see Appendix 4. The beneficial owners must be identified. These are any individuals that own or control 25% or more of the shares of the corporation or entity. 12.11 GUIDANCE MANUAL Agent Obligations under the PCMLTFA are fully described in the guidance manual provided by the CLHIA.

http://strategis.ic.gc.ca/


13.0 PRIVACY & PIPEDA 13.1 INTRODUCTION As of January 1, 2004, all businesses and individuals in Canada including, managing general agencies, including WFGIA Insurance, and licensed insurance agents are subject to legislation that regulates the collection, protection, use and disclosure of personal information. In provinces that had enacted legislation by January 1, 2004 that was substantially similar to the federal Personal Information Protection and Electronic Documents Act ("PIPEDA") these activities will be governed by such provincial legislation. Quebec, British Columbia and Alberta have their own provincial privacy legislation that is substantially similar to PIPEDA. These provincial laws will apply in these provinces. The collection, protection use and disclosure of personal information in all other provinces and territories, as well as the collection, use and disclosure of personal information in the course of interprovincial and international commercial activities, will be governed by PIPEDA. WFGIA Insurance is responsible for the protection of personal information and the fair handling of it at all times, throughout the organization and in dealings with third parties. Care in collecting, using and disclosing personal information is essential to continued consumer confidence and good will. The Act recognizes the individual's right to privacy, the need for an organization to collect, use or disclose personal information for legitimate purposes and establishes rules for handling personal information. 13.2 WHAT INFORMATION IS CONSIDERED PERSONAL? Personal Information is factual or subjective information about an identifiable individual. Examples are (but not limited to):

All health information or health history

Religious beliefs Home address Home telephone number Date of Birth Marital status Banking information Financial information Income Name, age, weight, height Purchases and spending habits

Blood type, DNA code, Fingerprints Sexual orientation Education Opinions (political or party

affiliations) Evaluations Comments Social status Disciplinary actions Race, and ethnic origin Credit records, loan records

Personal Information does not include the name, title or business address and telephone number of an employee or information that you would normally find on a business card.


The 10 Privacy Principles:

There are 10 principles that are the basis for PIPEDA. These principles have been incorporated into WFGIA Canada’s Privacy Policy. We must follow these principles for the protection of personal information. It is important that you understand these principles and WFGIA Canada's responsibilities. The 10 principles are:

Accountability Identifying Purposes Consent Limiting Collection Limiting Use, Disclosure and Retention Accuracy Safeguards Openness Individual Access Challenging Compliance

1. ACCOUNTABILITY: All employees/agents are responsible for compliance with WFGIA Canada's Privacy Policy and the 10 privacy principals. The Chief Compliance Officer and the Compliance Department are responsible for overseeing compliance with the Privacy Policies. 2. IDENTIFYING PURPOSES: The purposes for collecting personal information must be disclosed either at, or before, the time of collection. A client's personal information will be used only as required for the product or service that they are purchasing (ie Life Insurance). A client's personal information may be used for any of the following reasons:

Confirm identity. Determine eligibility, suitability or need for insurance and financial products. Determine and verify creditworthiness for the financial and insurance products

and services requested. Administration and servicing Meet regulatory and contractual requirements relating to the services and

products provided.

If clients have provided written consent, WFGIA Insurance may use a client's personal information to provide the client with details regarding WFGIA Insurance or products and services offered by us. A client may withdraw consent for this purpose on the application or by contacting the Compliance Department. 3. CONSENT: For collection: The knowledge and consent of the individual are required for the collection, use or disclosure of personal information, except when inappropriate. Consent is only meaningful if the individuals understand how their information will be used. We will also obtain the consent from the client prior to using personal information for a new purpose.


Client consent for collection and disclosure can be provided either verbally or written, expressed (for example providing information on an application form) or implied (for example not withdrawing consent when given the opportunity). Expressed consent should be used whenever possible and in all cases when the personal information is considered sensitive. This protects both the individual and WFGIA Insurance and the agent. When obtaining consent remember to:

Record how the consent is received (by phone, in person, by mail or email) as a note or copy to the file.

Never obtain consent by deceptive means. Explain to the individual the implications of withdrawing consent.

For use or disclosure: Situations may arise when you will be allowed to release a client's personal information without their consent. The two examples of situations that you may encounter are requests from regulators or reporting a suspicious transaction in accordance with our Anti-Money Laundering Policy. Examples of when NOT to release personal information:

• If the identity of the requester cannot be confirmed. • A family member calls on behalf of the client but you do not have consent from the

client to release the information. • A representative who is not the servicing representative is requesting client

information. • A lawyer, who has not provided evidence that he has been retained by the client

calls and requests client information. • A caller claims to be the policy holder's father, and holds a prestigious status within

his community but you do not have consent from the client to release information. • If you encounter a situation where it is unclear if information can be released,

discuss the situation with your manager or a member of the compliance team prior to releasing any information.

4. LIMITING COLLECTION: The type and amount of personal information collected must be limited to what is necessary for the identified purposes. All information will be collected by fair and lawful means. We may not collect personal information indiscriminately and we must not deceive or mislead individuals about the reasons for collecting the personal information. 5. LIMITING USE, DISCLOSURE, AND RETENTION: Use : Unless the individual consents or as required by the law, we may not use or disclose personal information for purposes other than the purpose for which it was collected. Disclosure: WFGIA Canada only discloses personal information to third parties with written consent from the client for the purpose of assisting us in evaluation of risk, investigations, servicing, administration and claims. All of our service providers, with whom we have a contractual relationship, are required to protect personal information in accordance with our Privacy Policy. Examples of disclosing to third parties are:

Service Providers such as Fundex


Product Providers such as Transamerica, Equitable and the Mutual Fund companies

Regulators

Retention: Client information must be maintained for 7 years after the last transaction on an inactive account or the closing of an account. 6. ACCURACY: It is your responsibility to keep personal information accurate, complete and up to date only as necessary, taking into account its use and the interests of the individual. Clients have the right to request the correction of any inaccurate or incomplete information about them in our possession. 7. SAFEGUARDS: Personal information must be protected by security safeguards appropriate to the sensitivity of the information. Our Responsibilities:

Protect personal information against loss or theft. Safeguard the information from unauthorized access, disclosure, copying, use or

modification. Protect personal information regardless of the format in which it is held.

WFGIA Insurance takes measures to ensure client's personal information is protected. The following examples should not be considered exhaustive:

Physical measures like locking filing cabinets at the end of the day, and restricting access to offices.

Technical tools such as passwords, encryption, and firewalls.

Organizational controls such as security passes, limiting access on a “need to know” basis, staff training and employee agreements. 8. OPENNESS: WFGIA Canada’s Privacy Policy is available for access on all of our websites. 9. INDIVIDUAL ACCESS: Upon request, a client will be informed of the existence, use and disclosure of his or her personal information and will be given access to that information. A client must be able to challenge the accuracy and completeness of the information and have it amended as appropriate. Upon written request, WFGIA Canada must provide copies of, or access to, the client's personal information. We are required to acknowledge this type of request within 5 days of receipt. The request must be fulfilled within 30 days. However, we can not release any information that would reveal personal information of a third party. If you should receive a request from a client asking for a copy of their personal information you must forward it to the Compliance Department immediately for handling. 10. CHALLENGING COMPLIANCE:


An individual must be able to address concerns with regards to compliance with the 10 principles. As such we have developed simple and easily accessible complaint procedures which obligate us to:

Investigate all complaints Notify the individual of the outcome of the investigation Take any relevant steps for correction All complaints that are deemed to be privacy complaints should be forwarded to

the Compliance Department for handling.

13.3 FAILURE TO COMPLY Privacy protection is a necessary part of doing business in today’s service economy. There can be significant risks and consequences (both commercial and legal) to our organization if we do not adequately address privacy. Failure to comply with the Privacy Legislation could result in:

Investigation and audit by the Privacy Commissioner A hearing in the federal courts Possible criminal charges Fines or imprisonment Damage to our reputation and business relationships Legal liability with industry sanctions Customer and employee distrust Lost business and consequential reduction in profits and market share.

13.4 DO NOT CALL RULES FOR FINANCIAL AGENTS On September 30, 2008 the CRTC published rules for telemarketer compliance with the Do Not Call (DNC). These DNC rules apply to agents and it is important that you comply with the requirements. You cannot call potential clients without first checking the DNC List and confirming that their number is not on it, unless you have their express consent to do so. Getting written or email permission protects you in the event of a future complaint or dispute. Keep a record of any such consents provided by consumers in a file, as the onus is on the telemarketer to prove valid consent was given to you. The telemarketing rules do not apply to mail or email. Service calls to existing clients are not telemarketing calls and therefore not subject to the Rules. A service call is a call that relates to insurance products or services that a client has purchased, applied for or made inquiries about or is required by regulation and/or standards of professional conduct. An example of a service call would be if you prepare a financial needs analysis for a client and later call to discuss the products or services that this analysis identified. Certain types of calls are exempt from the DNC regulations. They are:

Business to business calls


Calls by registered charities, by political parties, to conduct public opinion surveys, by newspapers to solicit subscriptions

Calls made to consumers if you have done business with them within the past 18 months or within 18 months of a contract expiring

Calls made by a consumer to you inquiring about your services within the past 6 months

Should you require more information, please contact the Compliance Department. 13.4 WFGIA PRIVACY POLICY & COMPLIANCE The clear and effective privacy policies at WFGIA Insurance Agency of Canada Inc. are applicable to all of its affiliates and their employees, officers, directors, distributors, agents, representatives and service providers with whom WFGIA conducts business with, has entered contracts with or has begun contract negotiations with. WFGIA believes that having a strong privacy and compliance policy builds trust among policy holders, account holders and clients. In order to ensure compliance with all applicable privacy legislation, WFGIA has appointed a Chief Privacy Officer. All matters related to privacy issues can be forwarded in writing or by telephone to:

World Financial Group Insurance Agency of Canada Inc. 5000 Yonge Street, Suite 800 Toronto, ON M2N 7E9 Telephone: 416.225.2121, option 2 Fax: 416.225.2113

14.0 OTHER MGA RULES 14.1 FEE FOR PLANNING World Financial Group Insurance Agency of Canada Inc. does not permit Agents to engage in the practice of fee for planning services. Agents are compensated through the sale of insurance products, any trails or commissioned generated from a sale, and any approved referrals that the Agent engages in.


15.0 APPENDIXES 15.1 APPENDIX A Sample LIRD Disclosure Document:

LIFE INSURANCE REPLACEMENT DECLARATION Do not cancel your existing policy until the new policy is in force and you accept it. Before you cancel your life insurance policy you should have answers to the questions below. Ask any insurance agent or broker, or an independent person, for help if you need it. Questions about your present life insurance policy Why do you want to replace your policy? Is the new policy better for you? How? Should you just buy more insurance or change your policy? How much will these changes cost? When should you cancel your present policy? When is your next annual dividend paid? Will the timing affect your cancellation charges? Will you pay more income tax if you cancel your present policy? Questions on the advantages and disadvantages of a new life insurance policy Do you understand the type of insurance policy you are buying? Is it a term life, whole life, or universal life insurance policy? You should know the differences. Are there times when the new policy will not pay all the benefits that your present policy does? Examples are suicide and contestable periods and contractual exclusions. Will the new policy pay as much as your present policy? Examples are death benefits, cash values, and dividends. Does the new policy have the same extra, or optional, benefits as your present policy? Examples are waiver of premium, guaranteed insurability, accidental death, and family member riders. Are there cancellation charges on the new policy? What guarantees apply to your present and proposed policies? Which policy has the best guarantees? Will either of the policy premiums (payments) go up? For how long will the premiums stay the same? How much will they increase? Important: The agent needs to give you copies of the documents used to compare the two policies. I confirm that I have received this document. _____________________________________________________________ Client’s signature Date I have given the client this document, and a written explanation of the advantages and disadvantages of replacing their life insurance policy, before starting the application for a new policy.


_________________________________________ ___________________ Agent or broker’s Signature Date Note: Your agent or broker should deliver and review the new policy with you. If it is not satisfactory for any reason, you may have the right to reject it and receive a full refund. Check the policy for the right of rejection and the time limit for the rejection.

15.2 APPENDIX B

