LLQP Ethics cheat sheet

Ethics governs what is right; regulation sets the minimum enforceable standard. Conduct can be legal yet still unethical, so compliance alone does not satisfy the ethical duty.

Core ethical principles: honesty, integrity, fairness, good faith, competence, diligence, confidentiality, and putting the client's interest ahead of personal gain.

Three levels of obligation: statutory law (Insurance Act), regulator rules and codes (provincial/territorial council code of conduct), and the individual licensee's professional judgment.

A fiduciary-like duty arises when the licensee holds discretion or superior knowledge; the client's interest outranks the licensee's compensation in any conflict.

Professionalism requires competence maintenance (continuing education), accurate representations of qualifications, and avoiding misleading titles or designations.

Regulators derive authority from statute; disciplinary powers typically include fines, suspension, revocation, conditions, and public disclosure of findings.

A conflict between a rule and the ethical duty is resolved by asking what a reasonable, informed client would expect; document the reasoning.

Ignorance of a rule is not a defence; licensees are expected to know the Act, regulations, and code applicable in every jurisdiction where they are licensed.

Suitability test: match the product to the client's needs, objectives, time horizon, financial capacity, risk tolerance, and existing coverage; document the basis for the recommendation.

Know Your Client (KYC) is the factual foundation for suitability; incomplete or stale KYC makes any recommendation unsupportable.

Material disclosure must be timely, clear, accurate, and complete: premiums, exclusions, limitations, surrender charges, compensation, and conflicts.

A conflict of interest exists whenever personal or financial interest could bias the recommendation; disclose it, manage it, or decline the engagement.

Priority order for a conflict: avoid, then control or disclose, then document; disclosure alone does not cure a conflict that distorts the advice.

Replacement or switching products triggers enhanced disclosure: compare costs and benefits, disclose lost benefits, and record the client's informed consent.

Unsuitable recommendations include over-insurance relative to need, under-insurance of core risks, and products whose liquidity or term conflicts with the client's horizon.

A client's refusal of suitable advice should be documented; the licensee is not required to force a purchase but must record the recommendation and the refusal.

Fair dealing with the public: no false or misleading advertising, no exaggerated claims of benefits, and no unsubstantiated comparisons to competitors.

Market integrity requires accurate, complete applications; knowingly submitting false information (e.g., misstated health or occupation) is fraud.

Anti-money-laundering duties: verify identity, monitor for suspicious transactions, keep records, and report suspicions to the designated authority; do not tip off the client.

Prohibited conduct: twisting (misrepresenting a replacement), churning (excessive switching for commission), rebating, and unlicensed selling.

Premium rebating or offering inducements outside the policy is generally prohibited because it distorts price competition and harms other consumers.

Referral arrangements must be disclosed and lawful; paying an unlicensed person for a referral that constitutes solicitation is prohibited.

Treat all clients equitably; discriminatory pricing or eligibility based on prohibited grounds violates human rights and insurance law.

Public trust is damaged by mis-selling; the standard is whether a reasonable member of the public, fully informed, would consider the conduct fair.

Licensees must deal with the regulator openly, honestly, and cooperatively; concealing information from the regulator is itself misconduct.

Reportable events typically include criminal charges, regulatory actions elsewhere, license suspensions, and certain civil judgments; report within the prescribed time.

Continuing education is a licence condition; failure to meet the hours or deadlines can result in suspension or conditions on the licence.

Supervision duties: a supervising licensee is accountable for the conduct of those they supervise and must ensure competence and compliance.

Self-reporting an error promptly and remediating it mitigates discipline; concealment aggravates it.

Licensees must not disparage or obstruct the regulator's investigation, and must produce records when lawfully required.

Mentoring and knowledge-sharing are professional obligations; competence of the profession as a whole depends on individual diligence.

Maintain the licence: renew on time, keep contact information current, and notify the regulator of changes in status or practice.

Client information may be collected, used, or disclosed only for purposes a reasonable person would consider appropriate, or with consent.

Consent may be express or implied; sensitive information (health, financial) generally requires express consent.

Permitted disclosures without consent are narrow: legal compulsion, court order, regulatory audit, or to prevent serious harm.

Privacy duties continue after the relationship ends and after death; retention periods are set by law and regulator rules.

Safeguards must be proportionate to sensitivity: access controls, encryption, secure storage, and clean-desk practices.

A privacy breach requires containment, assessment of harm, notification to the regulator and affected individuals where required, and remediation.

Sharing client data with an insurer or third-party administrator must be limited to the minimum necessary for the stated purpose.

Discussing client matters with colleagues is permitted only on a need-to-know basis; gossip or casual disclosure is a breach.

Decision framework: identify the facts, the stakeholders, the relevant rules and principles, the options, the consequences, then decide and document.

Test the decision against three questions: Is it legal? Is it fair to all affected? Would I be comfortable if it were public?

When duties collide (e.g., confidentiality vs. preventing harm), identify the paramount duty, act minimally to satisfy it, and record the reasoning.

Red flags: pressure to act quickly, requests to falsify or omit information, compensation that depends on the recommendation, and reluctance to document.

Escalate when uncertain: consult a compliance officer, the regulator's guidance, or legal counsel before acting, not after.

Documentation should be contemporaneous, factual, and sufficient for a third party to reconstruct the reasoning and the client's instructions.

Whistleblowing: report suspected misconduct through internal channels first where feasible; regulatory reporting may be required by law.

Remediation beats concealment: disclose errors promptly, correct the record, and make the client whole where the error caused loss.

Regulatory jurisdiction is territorial: a licensee must be licensed in the jurisdiction where the client resides at the time of the transaction.

Misrepresentation of a product or of one's authority is a breach even if no client suffers a financial loss; the risk of harm is sufficient.

Titles and designations must be accurate; implying a licence, certification, or regulator endorsement that does not exist is prohibited.

A licensee's duty of good faith is ongoing and cannot be waived by a client's consent to a breach of a statutory rule.

Record-keeping is a regulatory duty, not merely good practice; missing records can be treated as evidence of a suitability failure.

Confidentiality yields to a court order or statutory compulsion; voluntary disclosure to a spouse or family member without consent is a breach.

Suitability is assessed at the point of sale and on review; a change in the client's circumstances requires a fresh suitability assessment.

Ethical conduct is judged by an objective standard: what a reasonable, informed licensee in the same circumstances would have done.

Disclose compensation, including commissions and trails, before the client commits; contingent compensation is a conflict that must be managed.

Product replacement requires a documented comparison of the existing and proposed contracts, not merely a signed waiver.

If a client's objective and risk tolerance conflict, address the conflict explicitly rather than choosing one silently.

Referrals to an affiliated adviser or company must be disclosed as a conflict, including any referral fee.

Suitability for group benefits differs from individual products: consider the plan sponsor's objectives, not only the employee's.

A recommendation to do nothing (retain existing coverage) is itself a recommendation and should be documented.

Declining an engagement is appropriate where the licensee lacks competence or where the conflict cannot be managed.

Review the client file on a defined cycle; stale files are a leading cause of suitability findings in audits.

Advertising must be identifiable as advertising, accurate, and not disparaging of competitors; testimonials must be genuine and not misleading.

Selling without a licence, or assisting an unlicensed person to sell, is prohibited regardless of where the commission is paid.

Suspicious transaction indicators include unusual payment methods, reluctance to provide identification, and structuring to avoid reporting thresholds.

Record retention for anti-money-laundering purposes is generally at least five years after the relationship ends; follow the applicable statute.

Client funds must never be commingled with personal or agency funds; premiums are held in trust where required.

Misrepresenting policy terms to close a sale is a public-harm issue even where the client later benefits.

Fair treatment of vulnerable clients (age, illness, language) requires accommodation and, where capacity is doubtful, careful verification.

Market conduct reviews focus on sales practices, disclosure quality, and complaint patterns, not only on individual transactions.

A licensee must respond to regulator inquiries within the stated time; silence can be treated as non-cooperation.

Errors and omissions insurance is a condition of many licences; lapse must be reported and remedied promptly.

A change of address, name, or employment must be reported within the period set by the regulator.

Acting outside the scope of one's licence (e.g., giving securities or mortgage advice) is a breach even if the advice is sound.

A supervisor must review and sign off on the work of probationary or newly licensed staff where required.

Disciplinary history may be publicly disclosed; licensees should assume regulatory findings will become known to clients and employers.

Professional courtesy to other licensees does not extend to concealing their misconduct from the regulator.

Continuing education must be relevant and verifiable; falsifying attendance is a serious integrity breach.

Collect only the personal information needed for the stated purpose; over-collection is a privacy breach risk.

Use unique user IDs and strong authentication for systems holding client data; shared logins are prohibited.

Mobile devices and email must be secured; sending sensitive data unencrypted to an unsecured address is a breach.

Third-party service providers must be bound by contract to equivalent privacy and security standards.

Clients have rights of access and correction to their personal information, subject to narrow legal exceptions.

Retention schedules: keep records for the statutory period, then securely destroy them; indefinite retention increases risk.

A breach log should record the date, nature, data involved, containment steps, and notifications made.

Privacy impact assessments are appropriate before adopting new systems or data-sharing arrangements.

Case method: state the dilemma in one sentence, list the duties in tension, then apply the paramount-duty test.

If a client asks the licensee to backdate or alter a document, refuse, document the request, and consider reporting.

If a colleague is mis-selling, the duty to the public generally outweighs collegial loyalty; escalate internally and, if unresolved, to the regulator.

If a client lacks capacity, act in their best interest, involve a lawful representative, and avoid transactions that bind them unfairly.

When a gift or hospitality could influence advice, disclose it or decline it; the test is whether it could reasonably be seen as an inducement.

If a sale has already been made on an unsuitable basis, the remedy is correction: disclose, unwind where possible, and remediate.

Keep a written record of the ethical analysis where the decision is contestable; contemporaneous notes are strong evidence of good faith.

Consult the regulator's published guidance before acting in novel situations; following published guidance is strong evidence of reasonableness.

Integrity means consistency between what the licensee says and does; a single act of dishonesty can end a career regardless of loss.

Good faith requires acting honestly and in the client's interest, not merely avoiding outright fraud.

Competence includes knowing the limits of one's knowledge and referring the client to a specialist when appropriate.

Diligence means timely follow-up on applications, claims, and client inquiries; delay can cause real financial harm.

Objectivity requires setting aside personal relationships, gifts, and pressure when advising.

Confidentiality and privacy are distinct: confidentiality is the ethical duty, privacy is the legal regime; both apply.

Professional conduct extends to public communications, including social media, which are subject to the same accuracy standards.

A licensee's private conduct can be regulated where it bears on fitness to hold a licence or on public trust.

Licensing categories (life, accident and sickness, general insurance) define scope; selling outside the category is unlicensed activity.

Sponsorship or agency appointment is typically required for life insurance licensing; the sponsor is accountable for oversight.

Disciplinary process generally includes complaint intake, investigation, notice, hearing, and decision with reasons.

Sanctions escalate with harm and intent: caution, conditions, fine, suspension, revocation, and restitution.

Interim suspension may be imposed where there is an immediate risk to the public pending a hearing.

Appeals typically go to a court or tribunal on a defined standard, not a fresh hearing of the merits.

A regulator's findings may be shared with other regulators, affecting licences in other jurisdictions.

Restoration after revocation requires a formal application and evidence of rehabilitation and fitness.

Document the client's stated needs, the options considered, the recommendation, and the client's decision.

If the client declines to provide KYC information, the licensee cannot establish suitability and should not proceed.

Product concentration and affordability: a recommendation that consumes an unsustainable share of income is unsuitable.

Beneficiary designations and ownership must reflect the client's instructions and be reviewed on life events.

Policy loans, withdrawals, and lapse risk should be explained where the product permits them.

Suitability review intervals should be defined in the file, not left to chance.

Complaint handling: acknowledge promptly, investigate fairly, respond in writing, and record the outcome.

Referral to another professional (tax, legal) must be disclosed and coordinated, not used to avoid responsibility.

Risk-based approach: higher-risk clients and products require enhanced due diligence.

Beneficial ownership must be identified where the client is an entity; a nominee cannot be accepted without understanding the underlying owner.

Politically exposed persons require enhanced scrutiny and senior approval.

Sanctions screening must be performed before onboarding and on an ongoing basis.

Cash and unusual payment methods are high-risk indicators; follow the firm's escalation procedure.

Tipping off a client that a report has been made is prohibited.

Record-keeping must allow reconstruction of each transaction and the due diligence performed.

Training and independent testing of the AML program are expected of the firm, and staff must participate.

Identify the purpose before collecting; the purpose must be one the client would reasonably consider appropriate.

Express consent is required for sensitive data and for disclosure to third parties outside the original purpose.

An insurer's underwriting request authorizes disclosure of relevant health information, but only to the extent necessary.

A client may withdraw consent, subject to legal and contractual restrictions; explain the consequences.

Access requests must be answered within the statutory time or with a lawful reason for refusal.

Employees may access client records only where required for their role; curiosity is not a purpose.

Data minimization applies to disclosure as well as collection; redact what the recipient does not need.

Cross-border transfers require comparable protection and disclosure to the client.

Identify whose interest the recommendation serves before making it; if it serves the licensee's, re-examine it.

Sales targets and contests can create pressure; they must never determine the recommendation.

If a manager directs an unethical act, the licensee remains personally accountable; refusal and escalation are required.

Document the conflict, the disclosure made, and the client's response.

Where the conflict cannot be managed, decline the engagement or transfer the client.

Gifts from clients or product providers should be modest, disclosed, and recorded per policy.

The appearance of a conflict matters as much as an actual conflict; public perception is part of the test.

Review compensation structures periodically to ensure they do not reward unsuitable behaviour.

New licensees are typically subject to a probationary period with enhanced supervision.

Supervisors must review files, provide feedback, and document the review.

Competence includes product knowledge, regulatory knowledge, and communication skill.

Delegation of tasks does not delegate accountability; the licensee remains responsible for the advice.

Errors should be analyzed for root cause, not only corrected for the individual client.

Peer review and file audits are preventive controls, not punishment.

Mentoring records support a culture of compliance and are considered in disciplinary mitigation.

Licensees should maintain a personal log of continuing education and professional development.

Client asks to omit a health condition on an application: refuse; a material misrepresentation can void the contract and harm the client.

Client wants to cancel existing coverage to buy a new policy: compare, disclose lost benefits, and document consent.

Client cannot afford the recommended premium: reduce coverage or find a suitable alternative; do not oversell.

Client is a friend or relative: apply the same KYC and suitability standards; document the relationship.

Client asks for a loan against the policy for a speculative purpose: explain the risk and the effect on the death benefit.

Client's beneficiary is a minor: explain the need for a trustee or guardian arrangement.

Client requests advice outside the licensee's licence: refer and disclose the limits.

Client complains about a prior adviser: handle the complaint fairly without disparaging the other licensee.

Reportable events must be reported even if the matter is under appeal or not yet concluded.

Inquiries from the regulator should be answered factually and completely; speculation should be avoided.

Legal privilege does not permit withholding documents that the regulator is statutorily entitled to.

Cooperation includes providing records, attending interviews, and responding within deadlines.

Failure to report a known breach by another licensee can itself be misconduct.

Self-reported minor errors are typically treated more leniently than discovered ones.

Keep a record of all regulator communications and the responses given.

Seek legal advice where the inquiry concerns potential criminal liability, but do not delay reporting.

Access controls should follow least privilege; revoke access promptly on role change or departure.

Encryption in transit and at rest is a baseline safeguard for client data.

Physical records must be locked and disposed of by secure shredding.

Breach response: contain, assess risk of significant harm, notify where required, and remediate.

Notification thresholds and timelines are set by statute; when in doubt, escalate to the privacy officer.

Breach records support regulatory reporting and demonstrate accountability.

Vendors must be assessed and monitored; their breach is the firm's responsibility.

Staff training on phishing and social engineering reduces the most common breach vector.

Vulnerability may be temporary (illness, bereavement) or permanent (cognitive decline, disability).

Accommodate communication needs: plain language, interpreters, and extra time.

Where capacity is doubtful, verify with a lawful representative and avoid binding transactions.

Undue influence by family members should be identified and the client interviewed alone where feasible.

Elder financial abuse indicators include sudden beneficiary changes and unusual withdrawals.

Fair treatment means outcomes, not just process; test whether the client understood the recommendation.

Record the accommodation provided and the basis for concluding the client understood.

Refer to appropriate support services where vulnerability is outside the licensee's competence.

Never alter a document after signature; corrections must be made by the proper process and initialled by all parties.

Advice given verbally should be confirmed in writing where it is material.

Records should distinguish facts, the client's instructions, the licensee's recommendation, and the client's decision.

Contemporaneous notes carry more weight than later reconstructions.

Retain records for the statutory period and in a form that can be produced to the regulator.

Electronic records must be backed up and access-logged.

Destroy records securely at the end of the retention period, subject to any litigation hold.

A litigation hold suspends destruction once a complaint or claim is known.

Compensation must be disclosed in a form the client can understand before the transaction.

Contingent commissions and bonuses are conflicts that require management, not merely tolerance.

Rebating is generally prohibited; offering a personal inducement to close a sale is misconduct.

Referral fees must be disclosed and lawful, and must not be paid to unlicensed persons for solicitation.

Gifts and hospitality must be modest, disclosed, and within firm policy.

A licensee should not accept payment from a client and a product provider for the same service without disclosure.

Remuneration structures should not reward volume at the expense of suitability.

Record the compensation discussion in the client file.

Complaints should be acknowledged promptly and investigated fairly, with a written response.

The complaint file should record the issue, the investigation, the findings, and the remedy.

Remediation may include correction of the record, refund of premium, or compensation for loss.

Complaints must be reported to the regulator where required by the applicable rules.

Root-cause analysis should feed back into training and process improvement.

Do not discourage a client from complaining or from contacting the regulator.

A pattern of similar complaints signals a systemic suitability problem.

Document the client's acceptance or rejection of the remedy offered.

Social media posts are advertising and must be accurate, balanced, and approved where required.

Do not give personal advice in public forums; move to a private, compliant channel.

Client information must never be posted or referenced in a way that allows identification.

Endorsements and testimonials must be genuine and disclose any connection to the licensee.

Online reviews should not be solicited in a way that misleads or pressures clients.

Use of messaging apps for client business must comply with record-keeping rules.

Verify identity before discussing a policy through digital channels.

Personal and professional accounts should be separated; the regulator may review public content.

Licensing is territorial; a client resident in another jurisdiction generally requires a licence there.

Advertising into another jurisdiction may itself constitute carrying on business there.

Disclose to the client which regulator supervises the licensee and how to complain.

Multi-jurisdictional files should record the client's residence and the basis for the licensee's authority.

Confidentiality and privacy rules may differ across jurisdictions; apply the stricter standard.

Referral to a locally licensed adviser may be necessary where the licensee lacks authority.

Regulatory findings in one jurisdiction must be reported in others where licensed.

Keep current on the licensing rules of each jurisdiction in which you are licensed.

Explain exclusions, waiting periods, and limitations in plain language before signature.

Confirm understanding by asking the client to restate key terms or by a signed acknowledgement.

Illustrations must be identified as not guaranteed and the assumptions explained.

Surrender charges, policy loans, and lapse consequences must be disclosed where relevant.

Guaranteed versus non-guaranteed elements must be clearly distinguished.

Replacement disclosure should compare costs, benefits, and lost features.

Provide the policy and a summary within the required time after issue.

Record what was explained and the client's questions and responses.

Internal reporting channels should be used first where feasible and safe.

Regulatory reporting may be required by statute for certain misconduct.

Retaliation against a good-faith reporter is prohibited.

Reports should be factual, specific, and supported by records where available.

Confidentiality of the reporter should be protected to the extent the law allows.

A reporter's own misconduct is not excused by reporting the misconduct of others.

Document the report, the date, the recipient, and any response.

Failure to act on a known risk to the public can itself be misconduct.

Underwriting decisions must rest on relevant, lawful criteria, not prohibited grounds of discrimination.

Clients must disclose material facts; advisers should explain the consequence of non-disclosure.

Claims handling must be timely, fair, and based on the policy terms as written.

Advising a client to misstate a claim is fraud and a regulatory breach.

Ambiguity in policy wording is generally construed against the drafter.

Complaints about claims should be escalated through the insurer's process and, if unresolved, to the regulator or ombudsman.

Record the advice given about disclosure and claims obligations.

Fairness requires explaining a declined claim and the review options available.

The licensee is personally accountable for each recommendation, regardless of firm pressure.

When in doubt, slow down and seek guidance; speed is not a defence.

Keep knowledge current; outdated knowledge can cause harm even with good intentions.

Recognize personal biases (commission bias, optimism bias) and correct for them.

Declare conflicts early and often; late disclosure is weak disclosure.

A decision that cannot be documented is difficult to defend; document the reasoning.

Reputation is built slowly and lost quickly; the appearance of impropriety is costly.

Ethical conduct is a habit formed by consistent small decisions, not a one-time act.