IN THE MATTER OF the Insurance Act, R.S.O. 1990, c.1.8, as amended (the "Act"), in particular sections 392.5, 407.1, 441.2, and 441.3;

AND IN THE MATTER OF Daniel Lath.

NOTICE OF PROPOSAL TO REVOKE LICENCE
AND TO IMPOSE ADMINISTRATIVE PENALTIES

TO: Daniel Lath

TAKE NOTICE THAT pursuant to sections 392.5 and 407.1 of the Act, and by delegated authority from the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the "Chief Executive Officer"), the Director, Litigation and Enforcement (the "Director"), is proposing to revoke the life insurance and accident & sickness insurance agent licence issued to Daniel Lath ("Lath").

AND TAKE NOTICE THAT pursuant to section 441.3 of the Act, and by delegated authority from the Chief Executive Officer, the Director is proposing to impose administrative penalties in the total amount of $15,000 on Lath as follows:

an administrative penalty of $10,000 for making a false or misleading statement or representation in the solicitation or registration of insurance contrary to section 17(c) of Ontario Regulation 347/04; and
an administrative penalty of $5,000 for directly or indirectly furnishing false, misleading or incomplete information to FSRA contrary to section 447(2)(a) of the Act.

Details of these contraventions and reasons for this proposal are described below. This Notice of Proposal includes allegations that may be considered at a hearing.

SI VOUS DÉSIREZ RECEVOIR CET AVIS EN FRANÇAIS, veuillez nous envoyer votre demande par courriel immédiatement à: contactcentre@fsrao.ca

YOU ARE ENTITLED TO A HEARING BY THE FINANCIAL SERVICES TRIBUNAL (THE "TRIBUNAL") PURSUANT TO SECTIONS 407.1(2), 407.1(3), 441.3(2) AND 441.3(5) OF THE ACT. A hearing by the Tribunal about this Notice of Proposal may be requested by completing the enclosed Request for Hearing Form (Form 1) and delivering it to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you. The Request for Hearing Form (Form 1) must be mailed, delivered, faxed or emailed to:

Address:
Financial Services Tribunal
25 Sheppard Avenue West, 7^th Floor
Toronto, Ontario
M2N 6S6

Attention: Registrar

Fax: 416-226-7750

Email: contact@fstontario.ca

TAKE NOTICE THAT if you do not deliver a written request for a hearing to the Tribunal within fifteen (15) days after this Notice of Proposal is received by you, orders will be issued as described in this Notice of Proposal. TAKE FURTHER NOTICE of the payment requirements in section 5 of Ontario Regulation 408/12, which state that the penalized person or entity shall pay the penalty no later than thirty (30) days after the person or entity is given notice of the order imposing the penalty, after the matter is finally determined if a hearing is requested or such longer time as may be specified in the order.

For additional copies of the Request for Hearing Form (Form 1), visit the Tribunal's website at www.fstontario.ca

The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal ("Rules") made under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended. The Rules are available at the website of the Tribunal: www.fstontario.ca. Alternatively, a copy can be obtained by telephoning the Registrar of the Tribunal at 416-590-7294, or toll free at 1-800-668-0128 extension 7294.

At a hearing, your character, conduct and/or competence may be in issue. You may be furnished with further and or other particulars, including further or other grounds, to support this proposal.

REASONS FOR PROPOSAL

I. INTRODUCTION

These are reasons for the proposal by the Director to revoke the insurance agent licence issued to Daniel Lath ("Lath") and to impose administrative penalties in the total amount of $15,000 on Lath.
Lath is a licensed insurance agent who misleadingly submitted life insurance applications that insureds had not requested so he could meet a sales target that would qualify him for a prize from his Managing General Agency ("MGA"). Lath paid the premiums for the policies himself. He told FSRA that the clients had consented to the policies but at least some had not consented and did not know of the policies.
In addition, Lath did not complete the continuing education required of life insurance agents but told FSRA that he had completed it.
Based on Lath's conduct, the Director has reasonable grounds to believe that he is not suitable to be licensed. Further, administrative penalties are appropriate.

II. BACKGROUND

Lath is licensed as a life insurance and accident & sickness insurance agent (licence #17157779) under the Act. He was initially licensed on March 1, 2017, and his licence expires on February 28, 2025.
On February 26, 2023, Lath submitted his most recent renewal application (the "2023 Renewal Application"). On the 2023 Renewal Application, Lath indicated that he had completed 30 hours of continuing education in the two-year period ending February 28, 2023.
Lath was contracted under World Financial Group ("WFG"), an MGA, since he was initially licensed until April 4, 2023, when WFG terminated him. Lath, through his contract with WFG, was able to submit insurance business to insurers including ivari and Foresters Financial ("Foresters").
On March 10, 2023, Foresters submitted a Life Agent Misconduct Report ("LAMR") to FSRA reporting that Lath had submitted 16 client applications to Foresters without the client's consent and used two of his own bank accounts to fund the premiums on these policies.
On May 22, 2023, ivari submitted a LAMR reporting that they had terminated Lath on May 10, 2023, based on Foresters' termination.

Ill. FACTS

A. Submission of Insurance Applications

Between August 2022 and February 2023, Lath submitted 16 applications for policies to Foresters for clients where the banking information used to pay premiums was two of Lath's own bank accounts.
During this period, Lath contacted some of the clients by email to ask if he could open policies for them in order to win a prize. He indicated in at least one email that he would personally pay for the policies.
All 16 applications were for the same insurance product. One application was declined, but 15 policies were issued. For the 15 policies issued, Lath was paying $10,157 in monthly premiums from his own bank accounts.
The policy applications included a section where policy holders provide information about the bank account for premium payments and provides a signature line for the "Account Holder" to agree to the terms of the pre-authorized payment agreement. In each case, the signature that appears on the signature line is a client name.
For each application, Lath completed an "Advisor's Report" where he indicated that the insured or owner had initiated the application (rather than the advisor or another person) and that he had met with the insured in person to complete it.
Foresters paid WFG $95,526 in commissions for the 15 policies that were issued. All of the policies were terminated in February 2023.

B. Investigation and Misleading Statements

Foresters contacted Lath in February 2023 seeking an explanation of the use of his bank accounts to fund the 15 policies.
Lath told Foresters that the clients did not initially have the financial means to pay the premiums so "out of good faith" he decided to pay the initial premiums. He then indicated that he had since collected banking information for half the clients and submitted those. The remaining clients he indicated would be submitted promptly.
Two of the clients, HY and SA, for whom Lath submitted banking information told Foresters that they had not consented to the initial policies, nor had they provided consent for him to provide their banking information to Foresters. They had provided Lath with a void cheque for a TFSA withdrawal on January 23, 2023.
On February 22, 2024, Lath admitted that HY and SA were correct and that he had not obtained their consent. He maintained that the other clients had consented but could not provide any evidence of consent.
In May 2023, Lath told a FSRA Senior Compliance Officer that he had paid for the policies from his own bank account in order to win a prize from WFG but reaffirmed that he had consent from the clients to do so.
In June 2023, the FSRA Senior Compliance Officer spoke with three of the clients, including SA. Each of the three clients indicated that they had not signed the applications and were unaware of the policies issued in their names.

C. Missing Continuing Education Credits

Licensed life insurance agents like Lath must complete 30 hours of continuing education ("CE") credits within each two-year licensing period. The credits can not be carried over from one period to another.
When submitting his 2023 Renewal Application, Lath affirmed that he had completed the required 30 hours of CE credits in the prior two-year period (March 1, 2021, to February 28, 2023).
However, when Lath was asked to provide evidence of his completed CE credits, he only provided evidence of CE credits totalling 15.5 hours.

IV. CONTRAVENTIONS OR FAILURES TO COMPLY WITH THE ACT

A. False Statements in the Solicitation or Registration of Insurance

Section 17(c) of Ontario Regulation 347/04 states that a life insurance agent is prohibited from making a false or misleading statement or representation in the solicitation or registration of insurance.
The Director is satisfied that Lath contravened section 17(c) of Ontario Regulation 347/04 by submitting 16 policies under clients' names that were to be paid from his own bank accounts. Lath represented to the insurer that the clients were seeking insurance policies, while the policies were initiated by Lath to win a prize. He misleadingly completed and submitted the forms, including personal details and what purported to be the insured's signatures and banking information.

B. Insufficient Continuing Education Credits

Section 14 of Ontario Regulation 347/04 states that an individual who holds a life insurance licence shall complete at least 30 hours every two years of continuing education acceptable to the Chief Executive Officer in respect of life insurance.
The Director is satisfied that Lath contravened section 14 of Ontario Regulation 347/04 by completing only 15.5 of the required 30 hours of CE in the 2-year period between March 1, 2021, and February 28, 2023.

C. Misrepresentations to FSRA

Section 447(2)(a) of the Act states that it is an offence to directly or indirectly furnish false, misleading, or incomplete information to FSRA, whether the information is required or volunteered.
The Director is satisfied that Lath contravened section 447(2)(a) in two ways. Firstly, he falsely asserted on his 2023 Renewal Application that he had completed the required 30 hours of CE credits when he had only completed about half of the required hours.
Secondly, Lath falsely told a FSRA Senior Compliance Officer that he had received consent from the clients to submit the policy applications that he would then pay for.

Ill. GROUNDS FOR REVOCATION

Section 392.5(1) of the Act states that the Chief Executive Officer may revoke or suspend an agent's licence to act as an insurance agent if the agent has failed to comply with the Act, the regulations or a condition of the licence.
Section 392.5(2) of the Act states that the Chief Executive Officer may revoke or suspend an agent's licence if any prescribed grounds for revoking or suspending a licence, or for refusing to issue a licence, exist.
Section 8 of Ontario Regulation 347/04 prescribes the circumstances the Chief Executive Officer may have regard to when determining whether an applicant is not suitable to be licenced, namely if it appears that the licensee has:
1. Violated any provision of the licence in the licensee's operations as an agent;
2. Made a material misstatement or omission in the application for the licence;
3. Been guilty of a fraudulent act or practice; or
4. Demonstrated incompetence or untrustworthiness to transact the insurance agency business for which the licence has been granted.
Section 14 of Ontario Regulation 347/04 states that an individual who holds a life insurance licence shall complete at least 30 hours every two years of continuing education acceptable to the Chief Executive Officer in respect of life insurance.
Lath has failed to comply with the regulations and has made a material misstatement on his application in respect of completing his CE credits. He has also demonstrated a continued pattern of untrustworthiness by submitting applications without client approval and falsely representing to the insurer that the policies were initiated by clients and that the premiums were paid by the clients.
Further, failure to comply with the CE requirement in section 14 of Ontario Regulation 347/04 suggests that Lath may not have the requisite knowledge to carry on business in the insurance industry in a competent manner, and that he may not carry on business in accordance with the Act and regulations.
Lath's conduct poses a risk to consumers if he continues to be licensed that cannot be cured by attaching conditions to the licence.

IV. GROUNDS FOR IMPOSING ADMINISTRATIVE PENALTIES

The Director is satisfied that imposing administrative penalties on Lath under section 441.3(1) of the Act for the contraventions identified above will satisfy one or both of the following purposes under section 441.2(1) of the Act.
1. To promote compliance with the requirements established under the Act; and
2. To prevent a person from deriving, directly or indirectly, any economic benefit because of contravening or failing to comply with a requirement established under the Act.
In determining the amount of the administrative penalties, the Director has considered the following criteria as required by section 4(2) of Ontario Regulation 408/12:
1. The degree to which the contravention or failure was intentional, reckless or negligent;
2. The extent of the harm or potential harm to others resulting from the contravention or failure;
3. The extent to which the person or entity tried to mitigate any loss or take other remedial action;
4. The extent to which the person or entity derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure; and
5. Any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person or entity.
In respect of the first criterion, the Director is satisfied that Lath's submission of the insurance applications without clients' consent was intentional. He knew they had not requested the policies and that the insurers would be deceived by their submission, but he submitted them anyway in order to win a prize.
Further, his submission of the 2023 Renewal Application to FSRA indicating that he had completed the required CE credits was at least reckless. He could have easily reviewed his CE records to see that he had not completed the requirements for his licence. Nonetheless, he submitted the application affirming that he had completed them.
In respect of the second criterion, Lath created harm to an insurer and potential harm to consumers. Foresters' paid commissions of over $95,000 on the policies sold, believing that real consumers had been provided with insurance services.
Consumers had their personal information leveraged by Lath without their permission, entering them into financial contracts they did not request and exposing them to liability for premium payment.
In respect of the third criterion, Lath did not take steps to mitigate the harm caused by his actions. When approached by WFG and Foresters about his conduct, he attempted to cover it up rather than mitigate the harm. He also misled FSRA when asked about the policies.
In respect of the fourth criterion, Lath submitted the policies in an effort to win a prize for submitting a larger volume of policies. He reasonably expected to benefit financially from his deception. Further, he expected to benefit from the payment of the commissions, less his costs of paying the policies.
In addition, by falsely stating on his 2023 Renewal Application that he had completed the required CE credits, Lath reasonably expected to derive an economic benefit in the form of continued licensing as an insurance agent.
In respect of the fifth criterion, the Director is not aware of any other contraventions or failures to comply by Lath within the preceding five years.
Such further and other reasons as may come to my attention.

DATED at Toronto, Ontario, December 20, 2024

Original signed by

Elissa Sinha
Director, Litigation and Enforcement

By delegated authority from the Chief Executive Officer

Si vous desirez recevoir cet avis en français, veuillez nous envoyer votre demande par courriel immediatement a : contactcentre@fsrao.ca.

NOTICE OF PROPOSAL TO REVOKE LICENCE AND TO IMPOSE ADMINISTRATIVE PENALTIES