The Fonds d’indemnisation des services financiers (financial services compensation fund) was established in 1999 under the Act respecting the distribution of financial products and services. The fund compensates victims of fraud, fraudulent tactics or embezzlement for which a firm, independent representative, independent partnership, mutual fund dealer or scholarship plan dealer is responsible when offering a financial product or service.

On June 13, 2018, coverage under the fund was extended to compensate victims of fraud in relation to financial products and services offered by representatives, firms, independent representatives, independent partnerships, mutual fund dealers or scholarship plan dealers. The compensation is payable regardless of the sector or sector class in which the representative or firm is authorized to act. Therefore, even if representatives do not act within the authorized limits of their right to practise, compensation may be possible.

The extended coverage takes effect as of June 12, 2015. Accordingly, persons who have been the victim of fraud since June 12, 2015 benefit from the fund’s extended coverage.

The AMF is responsible for managing the amounts constituting the fund. The AMF keeps separate books in respect of such amounts and the costs incurred for the administration of the fund are paid out of the amounts constituting the fund. The assets of the fund are not part of the assets of the AMF.

AMF undertakings

As trustee of the compensation fund, the AMF undertakes to:

• award the mandate of measuring provisions to actuarial valuation specialists;
• award the risk rating mandate to actuarial valuation specialists;
• produce financial statements audited by the Auditor General of Québec;
• award the management of the fund’s investments to an investment committee.

Representatives and firms covered by the fund

For compensation to be paid, fraud must have been committed by a representative or firm as listed below, while offering a financial product or service.

If these representatives are attached to, for example, an insurance firm or independent partnership, mutual fund dealer or scholarship plan dealer, then the actions of that business could also be covered by the fund.

Title of representative	Examples of products and services offered
Financial security advisor	Life insurance policies Annuity contracts Segregated funds All types of accident and sickness insurance contracts that may be offered by insurance representatives GICs and term deposits
Accident and sickness insurance representative	Accident insurance Sickness insurance Salary insurance Individual disability insurance
Group insurance and group annuity plans advisor	Group insurance or group annuity plans
Group insurance plans advisor	Group insurance plans
Group annuity plans advisor	Group annuity plans
Damage insurance representative	Home insurance Automobile insurance Replacement insurance Liability insurance
Claims adjuster	Claims adjustment services as part of damage insurance claims
Financial planner	Financial planning services
Mutual fund dealer representative	Mutual fund units Registered mutual funds Mutual funds
Scholarship plan dealer representative	Scholarship plan units

Type of damage covered by the Fund

Financial loss that is directly related to fraud is covered by the fund.

Some indirect financial losses are not covered by the compensation fund. These include investment losses, redemption and account closing fees (except in certain cases) and unrealized returns.

Costs incurred by the claimant to file a compensation claim are not repaid and no compensation is payable for moral damages, stress, loss of enjoyment of life and disturbances and inconveniences.

Fund financing

The compensation fund has three sources of financing:

1. Contributions paid by certain firms and representatives registered with the AMF
   These are representatives, firms and independent partnerships registered under the Act respecting the distribution of financial products and services as well as mutual fund dealers and scholarship plan dealers registered under the Securities Act.

1. Subrogation
   Where victims are compensated by the fund, some of their rights against the representative or firm at fault are assigned to the fund. The fund may then sue the persons responsible as if it itself was the victim, allowing it to sometimes recover all or some of the amounts of compensation paid to the victims.
2. Returns on investments made by the fund
   All returns generated by the fund’s investments are paid to the fund.