Bill 30: Significant impacts on Quebec’s financial services industry

On June 7, 2023, Quebec Finance Minister Eric Girard introduced the Act to amend various provisions mainly with respect to the financial sector¹ (Bill 30) to the National Assembly. Bill 30 gives effect to Mr. Girard’s commitment announced at the last annual meeting of the Autorité des marchés financiers (Quebec’s financial sector regulator, the AMF) to adopt a series of omnibus bills modernizing the regulatory framework of Quebec’s financial sector. 

Bill 30 is part of this initiative and proposes a certain number of changes designed to simplify and ensure compliance with the regulatory and administrative process to which financial institutions and real estate brokerage firms are subject. If the changes established in Bill 30 are adopted, they will likely have significant impacts on enterprises that operate under the AMF’s jurisdiction and those that are subject to the Real Estate Brokerage Act² (REBA).³  

By using steeper monetary penalties to ensure compliance with administrative formalities and simplifying the administrative procedures associated with these enterprises’ activities, Bill 30 should enhance the efficiency of operations carried out in the financial and real estate sectors. 

This legal update follows the one published on June 21 that specifically discusses one of the major impacts Bill 30 might have on the offering of insurance products by recreational vehicle dealers and merchants. 

Reconsideration of an authorization under the Insurers Act

First, Bill 30 provides for simplifying the operation whereby authorized insurers become holders of control of a group. This operation will no longer be subject to the AMF’s review, only to the sending of a notice if those operations do not have a significant impact on the insurers.⁴ Consequently, Bill 30 reinforces the disclosure requirements of authorized insurers under the Insurers Act⁵ (IA) by requiring them to disclose, on two separate occasions over the course of a year, the names and addresses of the corporations they control.

In so doing, Bill 30 helps increase the efficacy of the regulatory framework that applies to insurers in the context of a takeover, provided this acquisition has no significant impact on them. For example, an authorized insurer could create new wholly owned subsidiaries without being required to ask the AMF to review its authorization, as is currently the case, provided the operation would have no significant impact on the authorized insurer.

Obligations of insurers in insurance of persons regarding life insurance contracts

Bill 30 proposes amending the provisions of the IA by imposing an additional obligation on insurers that commit to pay an amount under an individual life insurance contract, namely that they take the “means necessary” to obtain the information making it possible for them to know whether the amount is payable.⁶  

Moreover, insurers that know the sum is payable must, for a period of three years from the date the sum is payable, take the “necessary means” to ensure that beneficiaries who have not claimed the sum may be informed that it is payable. Insurers must also provide them with support in justifying their claim. The provisions introduced by Bill 30 suggest that the government may be issuing a regulation specifying and determining those means that insurers must take to comply with these new obligations. The means taken may vary depending on the type of insurance contract in question. 

Simplification of the regulatory regime applicable to claims adjusters

 Last April 6, the AMF announced an exceptional measure in response to weather events on April 5, 2023, that had resulted in a drastic rise in the volume of claims. The AMF issued an implementation directive allowing firms or independent partnerships of claims adjusters to use supernumeraries who are not certified claims adjusters to carry out activities reserved for claims adjusters.⁷ This was the fifth time in six years that the AMF temporarily eased its rules in order to support consumers.⁸ Initially temporary, this measure has now been officially retained by the National Assembly in the context of Bill 30. 

The bill does, in fact, seem to be responding to Quebec’s persistent labour shortage issues⁹ by officially allowing a person working for a firm, an independent partnership or an independent representative to carry out activities under the supervision of a claims adjuster, provided certain conditions are met. 

In such a case, this person must, among other things, inform the claimant that he or she is acting under the supervision of a claims adjuster and of the identity of that claims adjuster and, at the claimant’s request, refer the claimant’s record to that claims adjuster.¹⁰ The bill also addresses the verifications firms must make into such a person before he or she can act under the claims adjuster’s supervision, along with the various duties and obligations he or she has in that capacity.

Finally, Bill 30 proposes abolishing the restriction provided for in the Act respecting the distribution of financial products and services¹¹ (ADFPS) prohibiting claims adjusters from acting in another sector. 

Monetary administrative penalties in the financial sector 

Under the law currently in effect, the AMF has the power to impose monetary administrative penalties for breaches of certain provisions of the ADFPS, the Derivatives Act¹² (DA) and the Securities Act¹³ (SA). Bill 30 appears to be responding to the concerns expressed by the AMF in its 2021-2022 Annual Report regarding the frequent inability of creditors to pay off their entire debt resulting from the imposition of these penalties.¹⁴ The new regulatory framework attempts to partially remedy this inability, as far as recovering the monetary administrative penalties incurred under the ADFPS (by firms), the DA and the SA is concerned, by creating a solidary liability between the party responsible for the failure and its directors and officers under certain circumstances. 

Similarly, payment of a penalty will now be secured by a legal hypothec and may be subject to a withholding by the Minister of Revenue.¹⁵ The new provisions are likely an attempt to improve the efficacy of the recovery process and to allow the parties in question to enter into a payment agreement. 

The bill’s new provisions also grant the Financial Markets Administrative Tribunal the power to impose administrative penalties on a firm of up to $2 million not only on the person who contravened (as the provisions currently stipulate), but also on the person who aided in the contravention.¹⁶ 

Corollary impacts on the real estate brokerage sector

The real estate brokerage sector, like the financial sector, is governed by a regulatory authority whose goal is to protect the public: namely, the Organisme d’autoréglementation du courtage immobilier du Québec (self-regulating real estate brokerage organization, or OACIQ).¹⁷  

In line with the changes made to the laws administered by the AMF, Bill 30 introduces similar provisions for real estate brokerage matters. These new provisions give the OACIQ the power to impose monetary administrative penalties for non-compliances, for example when licence holders fail to send information within the time required by the OACIQ.¹⁸ Licence holders who fail to pay the imposed penalty may see their licences amended, suspended or revoked, subject to their right to obtain a review and to the contestation procedure before the Administrative Tribunal of Québec.¹⁹  

In addition to the changes made to the laws governing financial services, Bill 30 also seeks to ensure the recovery of amounts owing in administrative penalties by, among other things, introducing the solidary liability of officers and directors,²⁰ legal hypothecs, the possibility of entering into a payment agreement, and the issuance of recovery certificates.²¹ 

As can be seen, Bill 30 reinforces the financial and real estate sectors’ control mechanisms by imposing monetary administrative penalties while offering insurers the regulatory flexibility they need to adapt to market needs. It remains to be confirmed whether this first omnibus bill will be adopted in its current form once parliamentary business resumes this fall. Given the significant changes the bill proposes for distributions without a representative, it will be interesting to see what other aspects of the financial sector will be reviewed in the upcoming omnibus bills in this series.