Will I Lose My Insurance Agent License if I File Bankruptcy in Ontario?
Financial checks and credit reports are part of essential validation processes in some professions, such as financial roles or career paths with licensing organizations.
If you are an insurance agent in Ontario, you are licensed with the Financial Services Commission of Ontario, which, by law, is required to review your license in case of insolvency.
Consequently, filing for personal bankruptcy could affect your career and your license as an insurance agent in Ontario.
Will you lose your insurance agent license if you file bankruptcy in Ontario?
Not automatically, as our licensed insolvency trustees explain it here.
However, the Financial Services Commission of Ontario will review your licensing accordingly.
Here’s what it means for your insurance business:
Can bankruptcy prevent you from becoming an insurance agent?
The good news is that having filed for bankruptcy in the past or being currently bankrupt doesn’t stop you from applying to become an insurance agent.
However, you are expected to include information about your bankruptcy in your application.
Parc C: Level I Application and All Renewals requires applicants to declare bankruptcy, as per:
‘Ever been declared bankrupt or made a voluntary assignment in bankruptcy, or you are currently an undischarged bankrupt’
Failing to disclose bankruptcy at this stage will affect your application dramatically.
The Financial Services Commission of Ontario, FSCO, will review your license based on the information you provide:
- The name and address of your licensed insolvency trustee;
- The location of the bankruptcy filing;
- Your statement of affair (Form 79);
- The assigned of bankruptcy (Form 69);
- The date of discharge;
- And a brief explanation about the reason for filing bankruptcy.
What do I need to do when I file for bankruptcy in Ontario?
You will need to get in touch with a trustee who can administer your bankruptcy.
Your trustee can help you understand how it will affect your career as an insurance agent.
If you are licensed in Ontario, you are obliged by law to report your personal bankruptcy filing to the FSCO.
However, if you live in Ontario but don’t provide insurance services in the province, you will have to refer to the relevant licensing body.
Life insurance agents in Ontario have to report personal bankruptcy filings to the FSCO by doing the following:
- Signed and dated statement as well as the reasons for the filing;
- Form 69, assignment of bankruptcy;
- Form 79, statement of assets and liabilities.
The FSCO will then review each bankruptcy filing on a case-by-case basis to define whether it will affect your license.
Commonly, the decision to validate or cancel your license will depend on the reason for the bankruptcy, your lists of creditors, and your financial situation.
A consumer proposal is a safe alternative for an insurance agent in Ontario
If you are struggling with financial difficulties, you may want to consider alternatives to filing for bankruptcy.
Indeed, the FSCO reviews your licensing if you are declared or have been declared bankrupt.
However, a consumer proposal, which is another debt relief plan administered by a trustee, does not prompt reviewing of your insurance agent license.
While you are encouraged to report a proposal filing, it doesn’t lead to reviewing your license.
Additionally, for insurance brokers and agents whose income is commission-based, a consumer proposal reduces the risk of having to pay for surplus income.
If you are worried personal bankruptcy will affect your insurance agent career in Ontario, call (877) 879-4770 to review your debt management options with a trustee.