In June 2019, the Quebec Autorité de marchés financiers’ (AMF) Regulation respecting Alternative Distribution Methods (RADM) came into force. In December 2022, a Report was published regarding specific consultations on financial products and services offered via the Internet and RADM. The purpose was to gather experiences of stakeholders – consumers, intermediaries, insurers, and FinTechs – and identify issues affecting consumer protection or impacting the growth in the distribution of financial products and services via the internet.
The RADM covers the offering of insurance, financial planning, claims adjustment and mortgage brokerage products and services. It applies to firms operating digital spaces, such as websites or mobile apps, that are fully transactional on a self-directed basis.
Highlights of stakeholder comments:
Consumers are concerned about low levels of financial literacy. Internet-provided services need to be regulated, ensuring protection of consumers choosing this distribution method. In addition, an offered policy should be available at all times to the consumer.
Intermediaries expressed concerns over clients’ understanding of risk and representatives' understanding of scope of responsibility. Some expressed that a full needs analysis is sometimes necessary.
Insurers acknowledged greater facility to comply with the regulatory framework for simple products such as property and casualty insurance versus more complex life insurance products. However, the requirements preclude products and services from being offered on mobile apps which cannot accommodate all information requirements. Other insurers raised concerns over the prescriptive rules-based regulation, certain grey areas of interpretation and the burdensome process that impacts consumer experience and product innovation.
FinTechs viewed the regulation as an enabler of robust digital spaces, protecting consumers. They also favoured investments in cyber security. Comparing distribution through representatives versus digital spaces, FinTechs observed differences in sales pressure and expressed the view that needs analysis could be completed upon client request.
Following this report, the AMF will conduct further consumer focus groups and form working groups to address comments raised.