Expanded MGA definition risks new fees, confusion, and red tape for small practices, organization says
Ontario’s proposed regulatory overhaul for managing general agents (MGAs) could unexpectedly impact thousands of small advisory firms.
Advocis, joined by the Conference for Advanced Life Underwriting (CALU), has raised major concerns in a letter submitted to the Financial Services Regulatory Authority of Ontario (FSRA) in response to Proposed Rule 2025-001 – Life and Health Insurance Managing General Agents.
The associations acknowledge FSRA’s effort to enhance oversight, noting they value the chance to contribute to a framework that “enhances accountability, improves transparency, and reflects the realities of a modern financial services industry.” They also underline the strong public-interest role of professional financial advice.
Their core concern, however, is the scope. Advocis says FSRA’s updated draft goes far beyond what advisors anticipated during the initial 2025 consultation. While the regulator had signalled that some non-traditional MGAs might fall under the rule, many small partnerships, corporations, and multi-advisor practices assumed they would not.
The revised definition now appears broad enough to classify numerous advisors and agencies as MGAs even though they “never operated as MGAs nor held themselves out as such.”
This expansion brings significant consequences: licensing fees, new compliance obligations, and administrative overhead that could weigh heavily on small, family-run, and sole-advisor firms. The letter stresses that this direction conflicts with provincial commitments to reduce regulatory burden. It notes that “at a time when the Ontario government has made a clear and deliberate commitment to reducing red tape … the Proposed MGA Rule risks moving in the opposite direction.”
Advocis also argues that Ontario’s legislative underpinnings for MGA oversight are unclear. Definitions in the Insurance Act, they say, are circular and difficult to interpret, making it challenging to understand who is truly captured. They recommend either extensive guidance or legislative amendments.
The draft rule’s structure also raises issues because with the three proposed MGA tiers an entity could technically fall into more than one class, increasing complexity.
Another concern is lack of alignment with newer MGA models in New Brunswick and Saskatchewan. Advocis says Ontario’s version is noticeably broader, potentially creating unnecessary regulatory fragmentation across provinces.
While the industry bodies stress their willingness to collaborate with FSRA, they also highlight the importance of sufficient consultation time, reiterating that “30 days is not enough time for meaningful consultation,” and urge FSRA to ensure the final rule is workable for both consumers and the advisors who serve them.
