Posted March 17, 2025
Spot Checks are an integral part of RIBO’s public protection mandate, as they involve a review of a brokerage’s operations and financial records to ensure compliance with the Registered Insurance Brokers Act, Regulation 991 and other applicable by-laws and guidelines.
The Spot Check program gives RIBO’s auditors the opportunity to assess a brokerage’s practices, procedures, policies and operations and provide guidance, where appropriate, to resolve minor deficiencies. The objective is to work with brokerages, where possible, to improve and enhance their processes and practices so that they can meet their regulatory requirements. Auditors also meet with Principal Brokers during Spot Checks.
Most Spot Check files are closed with a letter to the Principal Broker indicating the outcome and any recommendations, where appropriate. In some cases, Spot Checks may be referred to the Investigations Department for further review. Escalations are made based on complexity, issue severity, risk criteria, and analysis of the audit facts.
RIBO continuously reviews and assesses its activities to find additional ways to educate and keep its licensees informed about how to meet their regulatory obligations. For example, in response to information derived through Spot Checks, RIBO has published bulletins, resources, tools, and guidance for Principal Brokers and licensees. They include Fair Treatment of Customers Guidance, Mandatory Disclosure Guidance, Common Position Report Errors, and more.
We are pleased to report that 99% of Spot Checks conducted between August 1, 2023 and July 31, 2024 did not raise regulatory concerns warranting further regulatory action and were closed. Only 1% of Spot Checks raised serious concerns and were referred to the Investigations Department.
Below is a summary of our 61 completed Spot Checks from the 2023-2024 fiscal year.
In 96% of brokerages, RIBO auditors identified at least one area where the brokerage would benefit from improved practices and provided related guidance and recommendations.
The most common areas for improvement are presented below.
75% of brokerages received guidance on improving their financial reporting and practices, based on the identification of:
More than half of brokerages (57%) did not have written documentation of disclosure to the client in client files. Additionally, summary quotation sheets, conflicts of interest and commission disclosure letters were not provided to clients. Copies were also not included in client files.
These brokerages were advised of the importance of maintaining records showing that disclosure was provided to each client. Not only does this allow brokerages to demonstrate compliance with disclosure obligations but it also gives them the opportunity to provide supporting documents, should there be complaints against them or an Errors and Omission insurance claim.
Of the cases reviewed, 29% did not comply with the timing of disclosure. Specifically, they provided disclosure to the client at or before the point of sale instead of by the time of quotation in accordance with guidance issued in April 2024. In some cases, client files also did not include the following:
Spot Checks revealed that 24% of brokerages do not have processes in place or maintain up-to-date records of Continuing Education hours completed by licensed brokers.
According to Spot Checks, 6% of brokerages reported that they do not have a documented office policies and procedures manual relating to conducting business transactions and working with clients.
Sharing these individualized recommendations for improvement with brokerages is one way that RIBO helps ensure high levels of compliance amongst brokerages and the adoption of best practices designed to protect consumers are in place across Ontario. Our objective in sharing this information with all brokers is to encourage them to assess their own practices and identify if similar improvements may be beneficial in their own organizations.
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