Note that references to “firm” in this document include an independent representative and independent partnership.
A firm that receives or collects amounts on behalf of others must maintain a separate account in which all such amounts are deposited. The separate account must be opened with a deposit institution and be separate from the firm’s other accounts.
Amounts that must be deposited in the separate account are those entrusted to the firm but intended for a third party. Examples include:
- Premiums collected on behalf of an insurer
- Indemnity intended for an insured
- Payments for suppliers involved in the settlement of a claim
- Advances on remuneration claimed from a client
- Payment of taxes collected by the firm and owed to government authorities
- Premium refund owed to a client
- In the mortgage brokerage sector, commission paid by a lender but owed to a third party
The separate account may not be used to pay the firm’s current expenses such as salaries, rent or office equipment, even if the firm is experiencing financial hardship. Such expenses must be paid from the firm’s other accounts. Moreover, the separate account must never have a negative balance.
The requirement to maintain a separate account is intended to protect consumers by ensuring that amounts held on behalf of others do not become comingled with the firm’s assets.
It is important that such amounts be deposited in the separate account as soon as they are collected or received.
At the time of registration, the firm must complete either the schedule Declaration pertaining to the opening of a separate account (pdf - 279 KB)This link will open in a new windowUpdated on 13 January 2015, if it intends to collect or receive amounts on behalf of others in connection with its activities, or the schedule Declaration pertaining to the absence of a separate account (pdf - 161 KB)This link will open in a new windowUpdated on 13 January 2015, if it does not intend to do so.
The firm must subsequently notify the AMF of any change to its declaration within 30 days following such change by completing the File Update form and submitting it along with one of the following schedules:
- Schedule – Opening of separate account (pdf - 279 KB)This link will open in a new windowUpdated on 13 January 2015
- Schedule – Absence of separate account (pdf - 161 KB)This link will open in a new windowUpdated on 13 January 2015
- Schedule – Update of separate account (pdf - 293 KB)This link will open in a new windowUpdated on 13 January 2015
For more information about good bookkeeping and separate-account management practices, refer to the Registrant Governance and Compliance Guide(pdf - 6 MB)This link will open in a new windowUpdated on 14 March 2018Registrant Governance and Compliance Guide.
Register pertaining to the separate account
A firm that receives or collects amounts on behalf of others must maintain a register pertaining to the separate account.
The register is used to identify and substantiate the deposits to and withdrawals from the separate account. The register must contain the following information:
- the client’s name
- the number of, or other means of identifying, the contract in respect of which the amount has been received or collected
- the amount received or collected
- the object of the transaction
- the name of the representative involved in the transaction
The register kept by a firm that receives or collects amounts in connection with its activities must also indicate the date of the deposit to or withdrawal from the separate account and the name of the recipient of the amount paid.
Accounting for the separate account
The accounting for the separate account must be kept separate and distinct from the firm’s general accounting. The accounting books or registers must contain the accounting of all amounts deposited in and paid out of the separate account.
Requirements applicable to amounts received or collected in connection with mortgage brokerage activities
Issuance of a receipt. A firm that pursues mortgage brokerage activities must give to the person from whom it receives or collects an amount on behalf of others a receipt indicating:
- the date of receipt or collection of the amount
- the amount received or collected
- the purposes for which the amount is received or collected
- the name of the person from whom the amount is received or collected
- the name of the mortgage broker involved in the transaction
- the date of the receipt and the name of the person who signs the receipt
The receipt must also indicate that the amount received or collected has been or will be deposited in the firm’s separate account and be signed by a person authorized to sign for the firm.
Withdrawals from the separate account must be made by transfer, cheque or other bill of exchange. They cannot be made in cash.