Independent Financial Brokers of Canada (IFB) is pleased to provide feedback on FSRA’s proposed amendment to Rule 2022-001 – Assessments and Fees (Consultation ID 2025-007)
Dec 8, 2025
Financial Services Regulatory Authority of Ontario (FSRA)
25 Sheppard St. W., Suite 100
Toronto ON M2N 6S6
Submitted via FSRA Portal
RE: Consultation on FSRA’s proposed amendment to Rule 2022-001 – Assessments and Fees (Consultation ID 2025-007)
Dear Sirs or Mesdames,
Independent Financial Brokers of Canada (IFB) appreciates the opportunity to comment on FSRA’s proposed amendment to Rule 2022-001 – Assessments and Fees (the “Fee Rule”) to introduce an application fee for Life & Health Managing General Agent (L&H MGA) licences.
IFB represents approximately 2,000 licensed life and health insurance agents and brokers across Canada, the majority of whom are licensed in Ontario.
Many operate as small incorporated corporate agencies or incorporated agents with a handful of associated advisors.
In our November 19, 2025, submission on FSRA’s updated Proposed Rule 2025-001 – Life & Health Managing General Agents (the “MGA Rule”), we raised detailed concerns that the framework, as drafted, risks unintentionally capturing ordinary corporate agencies and incorporated agents as MGAs, even where they do not perform distribution-level MGA functions on behalf of insurers.
The proposed amendment to the Fee Rule must be considered in that context. If small incorporated agencies are required to obtain an MGA licence, the $1,000 non-refundable application fee and future Phase 2 cost-recovery fees will have a disproportionate impact on these small practices relative to their size, role and risk profile.
1. Context: new MGA application fee layered on top of existing fees
Under Phase 1, FSRA proposes a fixed, non-refundable $1,000 licensing application fee for new L&H MGAs, effective June 1, 2026, to cover part of the direct cost of reviewing each application and to help offset start-up costs for the MGA framework.
FSRA notes that this fee was set by reference to other insurance-sector fees under the current Fee Rule – for example: $4,000 for a new Ontario-incorporated insurer; $400 for a corporation (corporate agent) licence on initial application and every two years; and $75–$200 for individual agent licences, also every two years.
FSRA specifically considered a $400 MGA application fee, aligned with the corporate agent fee, but rejected this on the basis that MGA applications will be more complex and that $400 would not adequately offset review costs.
This analysis appears to assume a stand-alone MGA sector. In practice, many entities that will be captured as MGAs are already paying FSRA fees as corporate agencies and as individual agents. For a small incorporated advisory practice that is now also treated as an MGA, the proposed framework could result in existing corporate agent licence fees and individual agent licence fees for each advisor, plus a new $1,000 MGA application fee, and later new MGA renewal and regulatory fees in Phase 2 (for example, renewal fees and sector-specific regulatory assessments to recover start-up and ongoing costs).
For a small practice whose primary business remains front-line advisory work, this stacks multiple layers of fees on a single book of business, with limited incremental consumer-protection benefit.
2. Impact on small incorporated agencies and incorporated agents
As outlined in our prior MGA Rule submission, many IFB members incorporate for tax, liability, continuity and succession planning reasons. They operate as retail advisory practices, not large distribution platforms, and may employ or contract with a small number of downline advisors (for example, the owners plus a handful of associates), providing practice-level mentoring and support.
If such practices are treated as MGAs solely because they contract with a few downline agents or provide limited oversight or mentoring, they will be required to obtain an MGA licence (in addition to corporate and individual licences), designate a DCR and implement a more formal MGA-level compliance system, and pay the new $1,000 application fee, with Phase 2 fees still to come.
For a small incorporated agency, this combination of new licensing requirements plus new fees will disproportionately increase fixed costs. The proposed flat $1,000 fee applies regardless of tier, even though FSRA itself acknowledges that larger, more sophisticated MGAs will require more intensive supervisory resources than smaller entities.
It may also discourage incorporation and small-scale succession planning. Incorporation is often used to support business continuity and succession (for example, bringing in one or two younger advisors as shareholders or downline agents). Additional licensing and fees may deter senior advisors from creating these structures, undermining succession planning and continuity of client service.
Further, it risks diverting resources away from client service. For a small corporate agency with limited revenue, the combined effect of multiple FSRA fees, enhanced compliance expectations, and new MGA-specific costs may force difficult trade-offs between investing in compliance infrastructure and investing in client-facing tools and support.
Finally, it layers fees on entities that already fall under existing oversight frameworks. These corporate agencies are already subject to corporate and individual agent licensing, and are connected to insurers that remain ultimately responsible for agent screening, training, and oversight under the MGA Rule. The incremental consumer-protection gain from adding an MGA licence and fee to such entities is not clear.
3. Interaction with Phase 2: risk of cumulative, unbounded costs for small practices
FSRA’s Notice explains that Phase 2 will introduce additional fees to recover start-up costs (estimated at approximately $9–10 million) and ongoing costs (estimated at approximately $3–4 million per year) from insurers that use MGAs and from MGAs themselves, likely through a renewal fee every two years and a regulatory fee designed to reflect the supervisory intensity required.
Without clear differentiation for entities that are, in substance, small corporate advisory practices, there is a real risk that such practices will pay multiple layers of FSRA fees (individual, corporate, MGA and regulatory) on the same business and be asked to shoulder costs that were designed with larger, more complex MGAs in mind.
This risk is heightened by the fact that FSRA did not propose differentiated application fees by MGA tier at this time, despite acknowledging that the intake review process for Tier 1 MGAs will likely be more extensive than for smaller entities.
4. Recommendations
A. Primary recommendation – confirm that small corporate agencies are not expected to obtain MGA licences
Consistent with our prior submission, IFB reiterates its core recommendation that FSRA use the MGA Rule and associated guidance to clarify that corporate agencies and incorporated agents whose primary business is acting as a licensed agent for their own clients, and whose supervision of other agents is limited and practice-specific, are not MGAs for the purposes of the Rule.
B. If certain small incorporated agencies must still be licensed as MGAs, calibrate fees accordingly
If, despite our recommendation, some small incorporated agencies are required to obtain MGA licences, we strongly recommend that FSRA introduce a reduced application fee for small or Tier 3 MGAs. In Phase 1, FSRA should consider a lower application fee (for example, aligned with the $400 corporate agent fee) for MGAs that have a small number of associated agents, do not perform broad distribution-level screening or training functions, and are not paid overrides based on a broad network’s production.
FSRA should also avoid double-charging entities for overlapping licensing categories. Where an entity is both a corporate agency and an MGA, FSRA should consider providing a credit or offset so that the combined corporate-plus-MGA fees are proportionate to the entity’s size and risk or allowing a single consolidated fee for small corporate MGAs, instead of stacking corporate and MGA fees.
When allocating start-up and ongoing costs under Phase 2, FSRA should use proxies such as number of associated agents, premium volume, or revenue to differentiate small practices from large platforms, explicitly test fee scenarios for two-to-five-advisor incorporated practices to ensure cumulative fees remain reasonable, and consider transitional relief (for example, reduced regulatory fees for the first renewal period) for small entities newly brought under the MGA regime.
Finally, FSRA should articulate how it will assess “ability to pay” for small corporate MGAs. For transparency, we recommend that FSRA outline, during the Phase 2 consultation, how it will operationalize “ability to pay” for small, incorporated agencies that are not large distribution intermediaries.
5. Conclusion
IFB supports FSRA’s objective of establishing a modern, transparent fee framework that fairly recovers the costs of regulating L&H MGAs.
Our concern is that, if small, incorporated agencies and incorporated agents are treated as MGAs, the proposed flat $1,000 non-refundable application fee – together with future Phase 2 fees – will create disproportionate financial and administrative burdens on entities that do not, in substance, operate as distribution-level MGAs.
We therefore respectfully request that FSRA confirm, through the final MGA Rule and guidance, that small corporate advisory practices are generally not expected to obtain MGA licences where they do not perform core MGA functions; and, if some such entities must still be licensed as MGAs, that FSRA calibrate the application and future fees so that they are proportionate to the size, role and risk of these small practices and do not simply layer additional costs onto existing corporate and individual licence fees.
We would be pleased to discuss these comments further or to participate in any stakeholder sessions FSRA may convene as it refines the Fee Rule amendments and the broader MGA fee framework.
Thank you for the opportunity to provide input.
Yours truly,
Nancy Allan
Executive Director, Independent Financial Brokers of Canada
E: allan@ifbc.ca