Under the Act respecting the distribution of financial products and services and its regulations, all registrants (independent representatives, firms and independent partnerships) must take out and maintain professional liability insurance covering their activities in the authorized sectors.The authorized sectors that can be covered by this type of insurance are detailed in the Act respecting the distribution of financial products and services, section 13. (R.S.Q., chapter D-9.2)

Also, all firms and independent partnerships must ensure that all of their attached representatives, whether employees or not, are covered by such an insurance.Act respecting the distribution of financial products and services, section 76 and 131.

Section 193 of the Securities Regulation stipulates that the same dispositions apply to Mutual funds dealers and Scholarship plan dealers as well as their dealing representatives.

Professional liability insurance grants the insureds (representatives or registrants) coverage against the monetary consequences of their civil liability in case of professional errors, fault, negligence, or omissions committed in the pursuit of their activities. Such insurance is mandatory and in addition to ensuring compliance with the regulatory requirements, this insurance protects clients from possible monetary consequences sustained as a result of professional errors, fault, negligence, or omissions, and protects the insureds against risks of insolvency resulting from a claim.

Most professionals take out professional liability insurance. On the other hand, to comply with the AMF regulations, a representative's or registrant's professional liability insurance contract must include special clauses, depending on the type of registration and the sectors authorized (refer to the table Compulsory clauses (pdf - 179 KB)This link will open in a new window).

Proof of insurance to be furnished to the AMF

Proof of insurance must be sent to the AMF along with every application for a certificate or registration.#2 The insurance contract must be kept in force at all times and proof must be sent to the AMF every year.Act respecting the distribution of financial products and services, section 83. The registrant must renew his insurance contract or take out another contract at least 30 days before its expiry date.Act respecting the distribution of financial products and services, sections 197.

If a sector is added, the representative or registrant must examine the clauses of his professional liability insurance contract and make sure that the necessary coverage is added for the new sector. Thus, if the addition of a sector leads to a change to the liability insurance contract, new proof of insurance must be sent to the AMF.

Power of sanction of the AMF

Failure to maintain professional liability insurance that is consistent with the regulation has serious implications. Indeed, the AMF may also suspend or cancel the registration already granted to a registrant, if the latter or any of his representatives is no longer covered by proper insurance.Act respecting the distribution of financial products and services, sections 76, 83, 132 and 136. Also, the AMF may refuse an application for a certificate or registration. Thus, a representative or registrant could lose his right of practice if he fails to maintain a professional liability insurance contract that is consistent with the regulation.