Citation: Saini v. Ontario (Superintendent Financial Services), 2018 ONFST 15 Decision No. I0748-2017-1 Date: 2018/07/06

IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, as amended (the “Act”), in particular sections 441.1, 441.2 and 441.3;

AND IN THE MATTER OF a Notice of Proposal to Impose an Administrative Monetary Penalty dated July 10, 2017 against Ramanjot Saini issued by the Executive Director, Licensing and Market Conduct Division by delegated authority from the Superintendent of Financial Services;

AND IN THE MATTER OF a Hearing in accordance with subsection 441.3(5) of the Insurance Act, R.S.O. 1990, c. I.8.

and

BEFORE:

Bethune Whiston Chair of the Panel and Vice-Chair of the Tribunal

For the Applicant – Ms. Ramanjot Saini, self-represented

For the Superintendent of Financial Services – Ms. Deborah McPhail and Mr. Ariel Schneider, Co-Counsel

Punjabi interpreter – Mr. Yash Kapur, who assisted Ms. Saini on several occasions.

DATE HEARD: March 19, 2018

1On July 10, 2017, the Superintendent of Financial Services (“Superintendent”) issued a Notice of Proposal to Impose an Administrative Penalty on the Applicant, who, at that time, was a licensed life insurance and accident and sickness insurance agent. The Superintendent proposed to impose an administrative monetary penalty (“AMP”) in the amount of $4,000 on the Applicant for allegedly failing to facilitate an examination by the Superintendent into;

a. whether she had errors and omissions insurance (“E&O”) while licensed from November 25, 2014 to July 6, 2016, and

b. whether she conducted any business as an insurance agent, during the period from July 5, 2016, to September 30, 2016, contrary to section 443 of the Act.

2On August 1, 2017, the Applicant filed a Request for Hearing with the Financial Services Tribunal (“Tribunal”). She requested that the Tribunal waive the penalty proposed by the Superintendent and indicated, on the Request for Hearing, that she was ready to surrender her licence.

3The Superintendent’s written submissions in respect of the hearing indicated that the Superintendent had agreed to withdraw the proposed AMP related to item [1]b. above. This was confirmed at the hearing. The Superintendent was therefore only requesting that an AMP of $2,000 be imposed on the Applicant.

4Having heard the evidence submitted by the Superintendent’s witness, Ms. Shaifa Chandani, the Applicant and the Applicant’s witness, Mr. Bhagwant Preet Singh, and having considered the documentation submitted as evidence by the parties and the submissions of the parties, I have determined that the Superintendent should proceed to impose an AMP on the Applicant in the amount of $2,000 for failing to facilitate an examination by the Superintendent into whether she had E&O while licensed from November 25, 2014 to July 6, 2016. My reasoning is set out below.

II. The IssueS

5At the Pre-Hearing Conference, it was determined that the following issues needed to be determined by the Tribunal at the hearing:

a. Did the Applicant fail to facilitate an examination by the Superintendent into whether she had E&O coverage from November 25, 2014, to July 5, 2016 (the “Twenty Month Period”), while she was licensed as an insurance agent under the Act, contrary to section 443 of the Act?

b. Did the Applicant fail to facilitate an examination by the Superintendent into whether she conducted any business as an insurance agent during the period from July 5, 2016, to September 30, 2016, contrary to section 443 of the Act?

c. If the answer to issues a. and/or b. is yes should an AMP be imposed; and, if so, in what amount?

6As noted above, the Superintendent withdrew his request for the proposed AMP related to failing to facilitate an examination by the Superintendent into whether the Applicant conducted any business from November 25, 2014, to July 5, 2016. Therefore, the issues are narrowed to issue [5]a. above and the following issue b: If the answer to issue a. is yes should an AMP be imposed; and, if so, in what amount?

III. The EVIDENCE

7The Applicant would not agree to an Agreed Statement of Facts or an Agreed Book of Documents. Therefore, the Superintendent called Ms. Shaifa Chandani, a Licensing and Registration Specialist (“LRS”) with FSCO, to provide evidence. Ms. Chandani confirmed the Applicant’s licensing history and the communications FSCO had with the Applicant over the period from August 30, 2016 until February 7, 2017 (a period of just over 5 months) in respect of the issue of whether Ms. Saini had E&O coverage in place in respect of the Twenty Month Period.

8Ms. Chandani’s oral evidence was supported by the Exhibit Book submitted into evidence by Superintendent’s Counsel, and I find the following facts to be true:

a. The Applicant was first licensed as a life insurance agent on July 6, 2012. She was sponsored by Primerica Life Insurance Company of America (“Primerica”). As of July 6, 2014, she was licensed as a non-sponsored agent.

b. On August 28, 2016, the Applicant submitted an application to renew her license.

c. On August 30, 2016, an LRS with FSCO sent the Applicant an e-mail requesting the Applicant’s current E&O certificate and her certificate for the Twenty Month Period. The e-mail advised the Applicant that information had been received from Primerica that Primerica had cancelled the Applicant’s E&O coverage effective November 25, 2014. The e-mail requested the E&O certificates by September 13, 2016.

d. No response was received. This was the first time the Applicant missed a deadline set by the LRS. The LRS sent the Applicant a reminder e-mail on September 21, 2016, asking the Applicant to provide a copy of the required documentation by a new deadline of October 5, 2016.

e. The Applicant responded to the LRS by e-mail on September 26, 2016, attaching an E&O policy certificate that was effective from August 14, 2016, to August 14, 2017.

f. The LRS e-mailed the Applicant on September 27, 2016, advising that the certificate that the Applicant had attached was not for the Twenty Month Period.

g. The Applicant responded on September 30, 2016, attaching a copy of an e-mail dated January 12, 2016, from the Licensing Compliance Unit (“LCU”) of FSCO. That e-mail confirmed that the LCU had received a change to its database submitted by the Applicant. The change indicated was in respect of E&O coverage. The change was indicated as follows:

“E&O Provider:AXIS REINSURANCE COMPANY

Policy Number:WFG011988

Expiry Date: 2016/07/05”

h. The LRS e-mailed the Applicant the same day, September 30, 2016, advising what the Applicant had provided did not count as providing FSCO with her E&O certificate for the Twenty Month Period. The e-mail asked the Applicant to provide the requested E&O certificates or advise if she did not have E&O for the Twenty Month Period. The e-mail further advised that the licence had been issued as an initial application rather than a renewal, as the Applicant’s licence had expired on July 5, 2016. This e-mail requested a response by October 10, 2016, regarding the E&O in place during the Twenty Month Period.

i. Following some further prompting by e-mails from the LRS to Ms. Saini dated October 11, 2016, (Ms. Saini missed the October 10 deadline so a new deadline of October 18, 2016 was set) and October 19, 2016 (Ms. Saini missed the October 18 deadline), the Applicant responded to the LRS by e-mail on October 20, 2016, stating: “I do have at that time”.

j. On October 24, 2016, the LRS sent an e-mail to the Applicant requesting the E&O certificates for the Twenty Month Period by November 2, 2016.

k. Several e-mails were exchanged on November 8, 2016 (the Applicant missed the November 2 deadline), between the LRS and the Applicant, including the following: On November 8, 2016, the Applicant sent the same E&O policy certificate as the one she had previously sent, for the one year period starting in August 2016. The LRS responded on the same day, stating that this was the same certificate as had been provided already and that FSCO had been requesting but not receiving the certificate for the Twenty Month Period since September 2016.

l. Again on November 8, 2016, the Applicant sent an e-mail to the LRS stating that her file was “closed” and she was “just holding Life Insurance licence but not actively doing business”.

m. On November 8, 2016, the LRS e-mailed the Applicant that the file was being escalated due to no proof of E&O for the Twenty Month Period.

n. The file was escalated to a Regulatory Discipline Officer (“RDO”) at FSCO. On November 24, 2016, the RDO sent the Applicant an e-mail and a letter by registered mail requesting a copy of her E&O certificate for the Twenty Month Period and explaining the legal requirement to have E&O insurance while licensed as a life insurance agent and the legal requirement to provide records to the Superintendent when they are asked to do so. The letter stated that this was the final request and gave a deadline of December 16, 2016, to respond.

o. The Applicant responded to the RDO on December 1, 2016, by e-mail, stating that she was carrying E&O for the Twenty Month Period but could not find her certificate. The Applicant also asked the RDO why this was “so needed”.

p. The LRS was cc’d on this e-mail and she responded to the Applicant by e-mail on December 8, 2016, explaining that it was mandatory to have E&O while licensed pursuant to section 13 of Regulation 347/04. The LRS advised that the RDO would speak to the consequences.

q. The Applicant responded to the LRS by e-mail on December 8, 2016, stating “Yes I did” and that she had tried to get her old certificate but no one had it. The Applicant cc’d the RDO on this e-mail.

r. On February 6, 2017, the RDO sent the Applicant an e-mail stating that she had so far failed to provide her E&O certificate for the Twenty Month Period, that this was the final request, and that it was to be provided by February 24, 2017.

s. The Applicant responded to the RDO on February 7, 2017, by e-mail, stating that she had tried to get a copy of her certificate, that she didn’t understand why FSCO was asking for, “all this past stuff which has no meaning now”, and asking the RDO not to stress her out.

t. To date the Applicant has not provided proof that she was covered by E&O for the Twenty Month Period.

u. The Applicant did not request an interpreter in respect of the e-mail communications she had with the FSCO officers, and at no time did she indicate that she did not understand what was being requested, although she did indicate she did not understand why it was being requested.

9Ms. Saini submitted some documentation to Superintendent’s Counsel at the commencement of the hearing and this documentation was entered into evidence. One of the documents (Exhibit G) was a copy of Exit Meeting Notes dated January 21, 2016 from a FSCO audit of the activities of the Applicant (the “Notes”). It appears that the Notes are related to an entirely separate and earlier review of Ms. Saini by FSCO that was closed on or about March 14, 2016. Ms. Chandani indicated in her examination by Superintendent’s Counsel that she had no understanding of the Notes and they were not relevant to what she was requesting. I accept this as true.

10The date of the Notes, January 21, 2016, is around the same time that Ms. Saini had entered a change into the FSCO database. On or about January 12, 2016, Ms. Saini entered some E&O information into the database and received an e-mailed receipt. I refer to the information described in paragraph [8]g. above. No link was ever made by Ms. Saini or by Superintendent’s Counsel between the earlier examination of Ms. Saini and the entering of E&O information into FSCO’s database, therefore I do not draw any conclusions from this information.

11Ms. Saini spoke in her defence. She indicated that she realized she had made a mistake; it was not intentional as she was ignorant of the requirements. She requested the Tribunal waive the AMP because; (a) she was new to the country, (b) she had no job, no income and was in no position to pay, and (c) she was under a great deal of pressure. I have no reason to doubt these statements and I accept them as true, however, as will be explained below, I have found that these facts do not assist the Applicant in her request to have the penalty waived.

12Ms. Saini also testified that the pressure she was under affected the timeliness of her responses to the e-mails from FSCO in August and September of 2016, as she had a new job and did not have time to check her e-mails. I can accept her evidence that she had a new job and that she was under a lot of pressure, but it is unlikely in our current environment that a person would not check her e-mails for a three week period. Coupled with the fact that Ms. Saini missed deadlines for responding to FSCO on several other occasions during a six month period from the end of August to the end of February, I do not accept that Ms. Saini was unaware of FSCO’s August 30 e-mail.

13The Applicant called a witness, Mr. Singh. Through Mr. Singh, the Applicant established that, like Mr. Singh, the Applicant had joined World Financial Group (“WFG”) in 2014. Mr. Singh confirmed that no guidance was given by WFG as to the E&O requirements. He also confirmed that Ms. Saini had forwarded some of the e-mails she received from FSCO to Mr. Singh and to an Executive Marketing Director at WFG. Some further e-mails, introduced into Evidence as Exhibit I indicate that individuals from FSCO were also in contact with the same individual at WFG to confirm that Ms. Saini had not sold any policies since the time she started at WFG, which was July 2014.

14As she was being cross-examined by Superintendent’s counsel, Ms. Saini confirmed that she became a non-sponsored agent at WFG effective in July 2014. She indicated that she renewed her licence for the sake of a friend. She was not aware that she needed E&O insurance; in fact, she thought that WFG would ensure insurance was in place for her. I accept this information as true.

15In her oral evidence, Ms. Saini indicated that she thought it was WFG’s responsibility to assist her to respond to FSCO’s inquiry. She then confirmed that, unfortunately, she did not get any guidance from the senior representative she was in contact with at WFG. In addition, Ms. Saini suggested that FSCO could have telephoned her to discuss the inquiry but they did not. Ms. Saini indicated that she doesn’t remember if she tried to call Ms. Chandani, but she did try, in December of 2016, to call Mr. McHayle at FSCO, the person her file had been escalated to. She does not remember if she left a message for Mr. McHayle. I accept these facts as true.

IV. LEGISLATIVE PROVISIONS

16 Section 13 of Ontario Regulation 347/04 under the Act, requires that an agent who holds a life insurance licence must have E&O insurance of at least a certain amount.

17 Subsections 443(1) and (2) of the Act read as follows:

443 (1) It is a condition of the licensing of a person that the person facilitate examinations.

(2) For the purpose of an examination…the person shall prepare and submit to the person conducting the examination such statements or returns with respect to the person’s business, finances or other affairs…as the Superintendent may require, and shall do so in the manner and within the period specified by the Superintendent or by the person conducting the examination.

18If I find that Ms. Saini did not facilitate the examination into the existence of an E&O certificate or certificates for the Twenty Month Period, I must then determine if it is appropriate that an administrative penalty be imposed. The relevant subsections for this determination are subsections 441.3(1) and 441.2(1) of the Act.

19Subsection 441.3(1) allows the Superintendent, by order, to impose an AMP on an insurance agent, as may be prescribed, if the Superintendent is satisfied that the agent has contravened the Act or a regulation under the Act.

20Subsection 441.2 (1) reads as follows:

441.2 (1) An administrative penalty may be imposed under section 441.3 or 441.4 for either of the following purposes:

To promote compliance with the requirements established under this Act.
To prevent a person from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under this Act.

21If I find that an AMP would promote compliance with the requirements of the Act and/or prevent Ms. Saini from getting a direct or indirect benefit from her behavior, then I must consider the amount of the AMP that should be imposed.

22The maximum amount of AMP that can be imposed on an individual in accordance with section 441.5 of the Act for a breach of Section 443 is $100,000. This is specified under subsection 3(1) of Ontario Regulation 408/12 (Administrative Penalties), combined with item 44.4 of Schedule 1 of that Regulation.

23There are only five criteria that I may consider in determining the appropriate amount of penalty to impose. These criteria are also found in Regulation 408/12. Subsection 4(2) of Ontario Regulation 408/12 reads as follows:

(2) The Superintendent shall consider only the following criteria when determining the amount of an administrative penalty to be imposed under section 441.3 of the Act for a purpose set out in section 441.2 of the Act:

The degree to which the contravention or failure was intentional, reckless or negligent.
The extent of the harm or potential harm to others resulting from the contravention or failure.
The extent to which the person tried to mitigate any loss or to take other remedial action.
The extent to which the person derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure.
Any other contraventions of or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person.

V. ANALYSIS OF ISSUE A – WAS THERE A FAILURE TO FACILITATE?

Issue a: Did the Applicant fail to facilitate an examination by the Superintendent into whether she had E&O coverage for the Twenty Month Period, while she was licensed as an insurance agent under the Act, contrary to section 443 of the Act?

24No previous cases of the Tribunal were brought to my attention by Superintendent’s counsel or the Applicant in respect of a failure by an insurance agent to facilitate an examination of the Superintendent.

25Based on the facts as I have outlined them above, I find that the Applicant did fail to facilitate the examination by the Superintendent. In the Cambridge online dictionary, the meaning of “facilitate” is to make something possible or easier.

26On numerous occasions during the investigation by FSCO, the LRS indicated that Ms. Saini must supply the requested E&O certificate(s), and on at least two occasions the LRS indicated that if she did not have E&O for the relevant period she should advise as such. To facilitate the investigation, the Applicant needed to prove she had E&O insurance during the Twenty Month Period or confirm that she did not have the coverage in question. The Applicant did not do this during the 6-month investigation.

27On the date that the Superintendent’s submissions on this matter were filed with the Tribunal, January 26, 2018, the Applicant had still not provided proof that she was covered by E&O for the Twenty Month Period. Also, I have seen no evidence that the Applicant clearly confirmed that she was not covered by E&O insurance for the Twenty Month Period, either during the examination by FSCO or prior to the hearing in this matter.

28It appears, because of several comments from the Applicant during the hearing, that the Applicant may not have had E&O insurance in place during the Twenty Month Period, but there continues to be confusion on the matter and I have not heard or seen from the Applicant any clear statement that the Applicant did not have E&O coverage for the period in question. The Applicant did say at the hearing that she had made a mistake, but it was not clear whether Ms. Saini was admitting that she did not have E&O insurance in place or she was admitting she did not facilitate the examination of the Superintendent into whether she had E&O or not. I have not been asked to make a finding on this issue and I make no finding.

29The Applicant did not respond to the Superintendent in a timely manner, missing deadlines imposed on her on several occasions. The Applicant provided inconsistent responses, indicating in a few e-mails that she did have E&O insurance, but also on one occasion (e-mail dated November 8, 2016), indicating “for 2014 I don’t remember now”. Several times she sent her current E&O certificate as if it might be sufficient, but she was clearly told each time that it was not what the Superintendent was looking for. She also pushed back at the Superintendent, saying “please don’t stress me out”, asking “why it is so needed…all this past stuff which has no meaning now”, saying why are you “asking again and again”. Ms. Saini did not mention to the Superintendent that she had contacted her sponsoring company to try and get a copy of the certificate until December, a full three months after the investigation was started.

30Ms. Saini has not “facilitated” the Superintendent’s examination. She has not made the examination easier, she has made it more difficult. She has not made it possible for the Superintendent to figure out if she had E&O coverage during the Twenty Month Period or not.

VI. ANALYSIS OF ISSUE B – IMPOSITION AND AMOUNT OF AMP

Issue b: If the answer to issue a. is yes should an AMP be imposed; and, if so, in what amount?

31 Subsection 441.2(1) of the Act states that an administrative penalty may be imposed either to promote compliance with the requirements established under the Act or to prevent a person from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under the Act.

32I find that an AMP is appropriate under the circumstances.The imposition of an AMP in this case will serve both purposes. It will promote compliance in the industry – sending a message to insurance agents to respond promptly and accurately to examinations by the regulator. It will also prevent the Applicant from receiving an economic benefit. If the Applicant did not have E&O for the Twenty Month Period – a fact that has still not been verified – then she enjoyed a direct economic benefit in not having to pay for E&O while licensed for twenty months. If she did have E&O for the Twenty Month Period, she still enjoyed some economic benefit in the sense of time saved from tracking down the details of her E&O for that period in order to respond adequately to FSCO.

33I further find that the proposed amount of $2,000 for failing to facilitate the examination into whether the Applicant had E&O for the Twenty Month Period is fair and reasonable, in accordance with a consideration of the below criteria.

34 Subsection 4(2) of Ontario Regulation 408/12 sets out the only criteria that the Tribunal may consider in determining the amount of the AMP. The following are the criteria and the application of each criterion to the facts of this case:

a. the degree to which the contravention or failure was intentional, reckless or negligent: the question here is whether the Applicant’s behavior in failing to facilitate the Superintendent’s examination (missing deadlines, providing conflicting and inaccurate responses, pushing back) was intentional, reckless or negligent. Ms. Saini indicated she made a mistake and it was not intentional as she was ignorant of the requirements. It is not clear whether her mistake was in not having E&O in place, which is a breach of the law, or in not understanding that she had to make it easy for the Superintendent to figure out whether or not she had E&O in place for the Twenty Month Period, or both. However, I am willing to accept that her breach of the requirement to facilitate the Superintendent’s examination was not intentional. I find that the Applicant’s conduct in responding to the examination was at least negligent, though, and may even have been reckless;

b. the extent of the harm or potential harm to others resulting from the contravention or failure: I agree with the Superintendent’s submissions that the Applicant’s evasive and unhelpful responses prolonged the investigation, caused it to be escalated, and resulted in this hearing. This caused harm to the regulatory process at FSCO and resulted in resources being diverted to a question that should have been simply and quickly answered;

c. the extent to which the person tried to mitigate any loss or to take other remedial action: the Applicant’s responses to the Superintendent did not indicate that she was interested in mitigating any loss or taking remedial action. Rather than becoming more helpful over time, she became less helpful – providing her current E&O insurance several times over, after being told that it was not the required certificate for the Twenty Month Period, admonishing the FSCO employees not to stress her out and making it clear that her personal life took priority. Several months into the investigation she did indicate she had tried to follow up with her sponsoring company, but no evidence of this was provided until the hearing;

d. the extent to which the person derived or might reasonably have expected to derive, directly or indirectly, any economic benefit from the contravention or failure: if the Applicant had E&O in place, she experienced an economic benefit in the sense of time saved in not more quickly and diligently pursuing proof that she had E&O. If she did not have E&O in place, the Applicant derived an economic benefit in not facing the risk of having an AMP imposed on her for not meeting the requirement of the Act and the Regulations to have E&O in place at all times while licensed as an insurance agent. The cases I am aware of where an insurance agent did not have E&O coverage in place were for shorter periods than the Twenty Month Period involved in this case, but the NOPs imposed in those cases would indicate that an AMP of around $2,000 would not be unexpected¹.

e. any other contraventions of or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the previous five years by the person: there is no evidence of any previous contraventions or failures to comply.

35Ms. Saini requested the Tribunal waive the AMP because; (a) she is new to the country, (b) she has no job, no income and is in no position to pay, and (c) she is under a great deal of pressure. However, I must only consider the above five things in determining what penalty to impose. These criteria do not include whether an agent is new to the country or not, whether an agent has a job and is able to pay the penalty or not, or whether an agent is under a lot of pressure or not.

36While there may be special circumstances where it is inappropriate to impose an AMP or it is appropriate to reduce a proposed AMP, I do not find that the circumstances of this case would support such a result. In view of these findings, the Tribunal concludes that it has no reason to substitute the Superintendent’s decision with its own, and finds that the appropriate monetary penalty for Ms. Saini’s contravention of the Act is $2,000.

VII. ORDER

37The Tribunal directs the Superintendent, by order, to carry out his proposal to impose an administrative monetary penalty of $2,000 on the Applicant, Ms. Saini.

Dated at Toronto, this 6th day of July, 2018.

“Bethune Whiston” __________ Bethune Whiston

Footnotes

For example, Dennis v. Ontario (Superintendent Financial Services), 2016 ONFST 18 at para 27, Manigbas v. Ontario (Superintendent Financial Services), 2017 ONFST 8 at para 28, and Khan v. Ontario (Superintendent Financial Services), 2018 ONFST 3 at para 24.