Montreal, Quebec — February 20, 2015 — The Quebec-based organisation Autorité des marchés financiers (AMF) has announced it is setting up measures to put a stop to non-compliant commercial practices pertaining to the sale of automobile insurance.
These measures follow four years of overseeing replacement insurance and related commercial practices. During this period, the AMF took action several times to remind industry participants of their legal obligations.
“Investigations and other work have led to the sanctions announced today regarding several automobile dealers and one damage insurance firm. As well, we would advise all industry participants to immediately cease non-compliant practices as indicated in a notice that is also being published today,” says Louis Morisset, President and CEO of the AMF. “The fair treatment of consumers is of concern to the AMF so we are giving them advice to help them make more informed decisions when they buy insurance products relating to the purchase or lease of an automobile.”
The AMF launched proceedings for sanctions against the commercial practices of nine automobile dealers and one damage insurance firm.
The AMF noted that, when purchasing an automobile from the nine dealers in question, some customers were offered automobile insurance products covering civil liability and damage to the vehicle (Q.P.F. No. 1), which may only be offered by damage insurance agents and brokers registered with the AMF. Customers were also offered replacement insurance (Q.P.F. No. 5).
Some of the dealers also failed to adequately describe the replacement insurance offered to customers and specify what was covered, or they offered a lower financing rate if the customer took out replacement insurance through the dealer.
The AMF therefore issued orders imposing administrative sanctions against the following automobile dealers:
– 4432231 Canada Inc. (Hyundai Vaudreuil) was fined $15,000
– Hyundai Lanaudière (2622-3412 Québec inc.) was fined $10,000
– Volkswagen Laurentides (Automobiles Lafontaine 2000 inc.) was fined $12,500
– Riendeau Hyundai (2845-6630 Québec inc.) was fined $10,000
– Honda de Terrebonne (Automobiles Donald Brassard inc.) was fined $15,000
– Volkswagen de l’Estrie (Sherbrooke automobiles inc.) was fined $15,000
– Honda de Blainville (2848-7403 Québec inc.) was fined $10,000
– Hyundai de Sherbrooke (Garage Renaud Fortier inc.) was fined $12,500
– Toyota Magog (2709970 Canada inc.) was fined $17,500
These dealers have filed applications in Superior Court for a review of the orders.
Moreover, the Bureau de décision et de révision took note of the agreement entered into between the AMF and the insurance firm Rochefort, Perron, Billette et associés inc. The Bureau approved the joint recommendations of the parties to impose a $45,000 fine and order the firm and its responsible officer, Alain Houle, to comply with An Act respecting the distribution of financial products and services. Under the agreement, the firm acknowledges that certain representatives did not give consumers enough advice and information regarding the proposed product and the coverage that could have been offered to meet their needs.
The AMF has provided a list of the practices that do not comply with An Act respecting insurance and An Act respecting the distribution of financial products and services. It advises those involved in the automobile insurance business that it intends to take the necessary steps to ensure that consumers are treated fairly.
Non-compliant practices include, other than the ones identified through the investigations mentioned above:
– Including the balance of a previous debt in the purchase price of the vehicle indicated in the replacement insurance contract
– Failing to offer consumers two options in the event of a loss (replace the vehicle through the designated dealer or receive an indemnity so the consumer can have his vehicle replaced through the dealer of his choice) when they purchased replacement insurance
– Compelling a customer to have his vehicle repaired with a specific dealer in the event of a partial loss
– Failing to indicate to customers the commission received, if it exceeds 30 percent of the insurance premium
– Making financing conditional on the customer purchasing an insurance product
The AMF has also informed insurers operating in the replacement insurance market in Québec about its concerns regarding non-compliant practices.
