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As a result of several recent cases at discipline committee meetings and our ongoing spot-check process, we have noted an increasing number of "line-of-credit" transactions where an end-of-the-month transfer in, is followed by a first-of-the-month transfer out of the trust account.
INCORRECT handling of trust monies - The following example assumes a broker using line-of-credit transactions. Typically, if a day's deposit of trust funds was $10,000, $9,000.00 would be transferred to the general account. From there the broker's bank would automatically reduce any outstanding amount on the line of credit. That broker would then draw on the line at the end of the month and transfer these funds into the trust account so that the brokerage appears to be in compliance with regulations on the last day of the month. Other brokers do not go to these extremes; they will make a deposit into the trust from the general account at month's end and transfer the same or a different amount out of the trust the first business day of the next month. In either of the above cases, the brokerage in question is probably in a trust deficit on all days of the month except one.
CORRECT handling of trust monies - Ontario Regulations require brokers to deposit funds received from the public immediately (no later than three banking days) into the trust account. Brokers may take monies belonging to the brokerage and deposit them into the general account but they must leave the remaining balance in the trust account according to the terms and conditions upon which the funds were received. The brokerage must be in a trust positive position at all times and over 90 day balances are excluded as a trust asset in this calculation. Consequently, the brokers in the scenarios referred to above are likely in noncompliance with the regulations pertaining to the handling of trust monies.
Please refer to the Practice Advisory June 2000 Bulletin (also on Website) pertaining to the "three-step approach." This approach allows a broker to answer the question, "what's mine and when can I take it?" If followed, the member will be in full compliance with the above regulations.
Additional Consideration ("Line-of-Credit" Scenario)
A broker that had taken a long-term debt or structured his debt in another way will likely find the interest saving insignificant in comparison to avoiding the potential disciplinary actions.
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FINANCIAL EXAMINER
RIBO requires a financially oriented individual. The salary range is $45,000 -$55,000, depending on experience and qualifications. Office experience in an insurance brokerage is an asset.
Responsibilities:
- Assist registrants in accounting and trust fund matters.
- Analyze financial positions and ensure compliance with regulations.
- Perform on-site corroboration of financial reports.
- Assess new business registrations.
Qualifications and Experience:
- A designation or fifth level standing in a recognized accounting program, preferably with audit experience.
- Good communications skills and an ability to deal with the membership. Travel by personally owned automobile required.
Please forward your application to:
Tim Goff, Manager, Complaints and Investigation
C/O Registered Insurance Brokers of Ontario
401 Bay Street, Suite 1200, P.O. Box 45
Toronto, ON M5H 2Y4
Fax 416-365-7664
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Decisions OF The Discipline Committee
CAUTION: While the information contained below is public, members should take caution that inappropriate use of this information may be considered to be
misconduct.
Insuranceland Inc.
Registration No. A02459
Peter John Hainer
Registration No. R04642
Scarborough, Ontario
MISCONDUCT: Ont. Reg. 991, ss 15(1)(13); 16(4); 16(5); 16(6)
PARTICULARS OF THE COMPLAINT
- Mr. Hainer, as Principal Broker of Insuranceland Inc. knowingly concurred in the misconduct of the corporation.
- Insuranceland Inc. disbursed or withdrew monies from its trust account in a manner not in compliance with the provisions of ss16(4); 16(5); 16(6) of Ont. Reg. 991.
DISCIPLINE COMMITTEE'S DISPOSITION (10/30/00)
- The Discipline Committee accepted the plea of guilty of Mr. Hainer personally and on behalf of Insuranceland Inc. to the alleged misconduct.
- The Discipline Committee was satisfied that the problems had been rectified, and accepted the submission as to penalty from RIBO and Mr. Hainer, and ordered:
- That Insuranceland Inc. shall file with RIBO monthly position reports in Form-1 for a period of 2 years, all of which position reports must reflect that the brokerage is maintaining its net trust position in compliance with ss 16(4); 16(5); 16(6) of Ont. Reg. 991.
- That Insuranceland Inc. shall pay a fine in the amount of $1,500.00, payable to the Ministry of Finance.
- That failure by Mr. Hainer or Insuranceland Inc. to comply with the terms and conditions of the Order of the Discipline Committee shall result in the Certificate of Registration of Mr. Hainer being restricted to acting under supervision.
Ronald Procop
Registration No. D9558
London, Ontario
MISCONDUCT: Ont. Reg. 991, ss 14(2); 14(3)
PARTICULARS OF THE COMPLAINT
- Pursuant to a prior Order of the Discipline Committee of RIBO, the Certificate of Registration of Mr. Procop was suspended for the period August 20, 1999 to July 31, 2000.
- Mr. Procop, during the period of suspension was engaged in the selling of Accident and Sickness Insurance policies, and continued to act otherwise in soliciting, negotiating or procuring the making of other contracts of insurance, while not legally competent to do so.
DISCIPLINE COMMITTEE'S DISPOSITION (12/07/00)
- The Discipline Committee found Ronald Procop guilty of the alleged misconduct.
- The Certificate of Registration of Ronald Procop was revoked effective December 7, 2000.
Roman Mamalyga
Registration No. D19360
Toronto, Ontario
MISCONDUCT: Ont. Reg. 991, ss 14(1); 16(5)
PARTICULARS OF THE COMPLAINT
- Mr. Mamalyga failed to discharge his duties to clients, members of the public, fellow members and insurers with integrity and in addition, misappropriated trust funds, arising out of a request by a client to place automobile insurance on his behalf.
- Mr. Mamalyga accepted a premium payment from the client in the form of cash but did not remit these monies to his employer brokerage, nor the insurer, nor did he place the requisite coverage with the insurer.
DISCIPLINE COMMITTEE'S DISPOSITION (12/07/00)
- The Discipline Committee accepted the plea of guilty of Roman Mamalyga to the alleged misconduct.
- The Certificate of Registration of Roman Mamalyga was revoked effective December 7, 2000.
Bhupendrasinh L. Parmar
Registration No. D13359
Scarborough, Ontario
MISCONDUCT: Ont. Reg. 991, s 14(1)
PARTICULARS OF THE COMPLAINT
- Mr. Parmar failed to discharge his duties to clients, members of the public, fellow members and insurers with integrity arising out of a request by a client to arrange automobile insurance on his behalf.
- Mr. Parmar accepted a premium payment from a client in the form of cash, gave the client a temporary liability slip, but did not remit the monies to his employer brokerage, nor the insurer, nor did he place the requisite coverage with the insurer.
DISCIPLINE COMMITTEE'S DISPOSITION (12/07/00)
- The Discipline Committee found Bhupendrasinh L. Parmar guilty of the alleged misconduct.
- The Certificate of Insurance of Bhupendrasinh L. Parmar was revoked effective December 7, 2000.
Andrew Wright
Registration No. D12869
Kirkland Lake, Ontario
MISCONDUCT: Ont. Reg., s 14(8)
PARTICULARS OF THE COMPLAINT
- Mr. Wright was involved in a dispute over an endorsement to a commercial client's insurance policy. The client requested a cancellation of the policy and was advised by Mr. Wright that the policy would be cancelled flat.
- Mr. Wright then invoiced the client for a $500.00 service fee which was not disclosed to the client prior to the service being rendered.
DISCIPLINE COMMITTEE'S DISPOSITION (02/08/01)
- The Discipline Committee found Mr. Wright guilty of the alleged misconduct.
- The Certificate of Registration of Andrew Wright was revoked effective February 8, 2001.
Ada Catalano
Registration No. D18851
Toronto, Ontario
MISCONDUCT: Ont. Reg. 991, ss 14(1); 16(4)
PARTICULARS OF THE COMPLAINT
- Ms. Catalano failed to discharge her duties to clients, members of the public fellow members and insurers with integrity.
- Ms. Catalano failed to deposit trust monies into the brokerage's trust account in a timely fashion.
- Ms. Catalano attempted to backdate a policy of automobile insurance on her own vehicle in an attempt to secure coverage after an accident occurred.
DISCIPLINE COMMITTEE'S DISPOSITION (02/22/01)
- The Discipline Committee found Ada Catalano guilty of the alleged misconduct.
- The Certificate of Registration of Ada Catalano was revoked effective February 22, 2001.
- In addition, Ada Catalano was fined $1,000.00.
Lori Lynn Jones
Registration No. D17440
Mt. Brydges, Ontario
MISCONDUCT: Ont. Reg. 991, ss 14(1); 16(4)
PARTICULARS OF THE COMPLAINT
- Ms. Jones failed to discharge her duties to clients, members of the public, fellow members, and insurers with integrity.
- On a number of occasions, Lori Lynn Jones accepted trust monies from clients but did not remit these monies to her employer brokerage.
- On a number of occasions, Lori Lynn Jones requested coverage alterations from insurers without the instruction of the client to do so.
DISCIPLINE COMMITTEE'S DISPOSITION (02/22/01)
- The Discipline Committee found Lori Lynn Jones guilty of the alleged misconduct.
- The Certificate of Registration of Lori Lynn Jones was revoked effective February 22, 2001.
- In addition, Lori Lynn Jones was fined $2,500.00.
CONSENTS BEING RECEIVED IN EACH
OF THE FOLLOWING MATTERS, THE
DISCIPLINE COMMITTEE MADE THE
FOLLOWING ORDERS:
Donald C. Lawrence
Registration No. R6518
London, Ontario
MISCONDUCT: Ont. Reg. 991, s 14(12)
PARTICULARS OF THE COMPLAINT
- Mr. Lawrence was the Principal Broker of Pro Insurance Brokers and as such was responsible for the supervision of all registered insurance brokers employed by the brokerage.
- As a result of a prior Order of the Discipline Committee of RIBO, Ronald Procop, a registered insurance broker and former Principal Broker of Pro Insurance Brokers had his Certificate of Registration suspended.
- During the period of the suspension, Mr. Procop continued to carry on business as a registered insurance broker at Pro Insurance Brokers.
- Mr. Lawrence as Principal Broker of Pro Insurance Brokers failed in his duty to prevent this unauthorized practice by Mr. Procop.
DISCIPLINE COMMITTEE'S DISPOSITION (12/07/00)
- The Certificate of Registration of Donald C. Lawrence was restricted to acting under supervision, effective December 7, 2000.
Darren Hamilton
