Agent sanctioned for KYC, client fundraiser

A life agent who created a GoFundMe fundraiser to help a client who was unable to access funds locked into a life insurance policy has been sanctioned by the Insurance Council of British Columbia (ICBC).

The regulator ordered the agent, Mengyuan Li, to complete certain ethics courses by Nov. 3 and to pay $3,125 in costs, after finding that she breached its rules and code of conduct by providing false income and employment information on a client’s whole life policy, setting up a GoFundMe to help the client when they needed money, and improperly using an insurer’s logo on a client presentation.

According to the regulator’s order, in 2021, Li opened an RRSP, a TFSA that required a weekly premium and a whole life policy for a new client, who was a student at the time.

In late 2022, the student filed a complaint alleging that she had misrepresented his employment and inflated his income on the policy application. He also claimed that he was told he could recover the premiums if he stopped paying them within a certain timeframe.

At the time, he was still a student and had no annual earnings, yet the policy listed him as self-employed with an $85,000 annual income.

According to the order, Li couldn’t remember whether it was the client or another agent who provided the income information, but that “she wrote down what she was told” and didn’t typically require income verification.

“She admitted that she genuinely believed the [client] was working at the time and never questioned whether he was a student,” the order said.

The regulator concluded that she breached the rules by improperly documenting the client’s income, although it said it was not clear where the incorrect information came from.

“Since she was new to the industry, it appeared she simply took down instructions that she was provided, without conducting further due diligence,” it said.

The council concluded that Li wasn’t fully responsible for the mistake because the client had the opportunity to read the policy and correct the mistake, and he ultimately signed it. It considered the possibility that he used the incorrect income information as an excuse to get out of the policy.

Additionally, the client complained that after he tried to withdraw the $11,000 he had paid in premiums from the policy to pay a relative’s medical bills, and was told he couldn’t access that money, Li created a GoFundMe account to help raise money for those bills and donated $5 to it, it noted.

“When the [client] learned the GoFundMe account was open to public donations, he deleted the account and made a formal complaint,” it said.

According to the order, Li said she created the fundraiser “because she understood the tough circumstances the [client] was in and that because she was unable to cancel the policy and return his premiums, she wanted to do what she could to help him in her personal capacity.”

The council found that she breached her obligation of client confidentiality by creating the GoFundMe account based on information about his financial circumstances that she learned in a professional capacity.

“Council believed [Li] had good intentions but noted that she did not seek out more appropriate alternatives to help her client,” it said. “… although this may not have been the best method to remedy the situation, it was well-intended and [she] sincerely tried to help the [client].”

Additionally, she co-operated in the investigation, it noted, in handing down sanctions.