Question

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question # 1: ramesh has held a life license for 20 years. his sister, ramona, runs the office, and often files the paperwork, but is not licensed. he focuses on selling insurance to his community exclusively and is well known and respected in this community as he is very helpful and approachable. he often helps them fill out the necessary forms. he has been accused by the financial services commission of ontario of fronting. which of the following describes the violation that ramesh must have committed?
a) ramesh signed on behalf of ramona for a life insurance clients business she acquired.
b) ramesh submitted the insurance application for a client before verifying the information in the application.
c) ramesh helped a client fill out a claim for disability insurance knowing the client was not really disabled.
d) ramesh sold an insurance policy to a neighbour without declaring a conflict of interest.
your answer
× ramesh sold an insurance policy to a neighbour without declaring a conflict of interest.
rationale: the financial services commission of ontario (fsco), now replaced by the financial services regulatory authority of ontario (fsra), defined fronting as situations in which an agent holds a licence but chooses to have another agent who did not actually complete the transaction sign as the agent of record, or where an unlicensed person arranges the business and has a licenced person sign on their behalf. ramesh must have paid a commission to his sister which is not permitted as she is not licensed. the other actions are not fronting of which he is accused of.
ref: 4.2.3.6

Explanation:

To determine the correct answer, we analyze the definition of "fronting" from the rationale: an agent with a license has an unlicensed person arrange business and then a licensed person signs. Option a describes Ramesh (licensed) signing for Ramona (unlicensed) who acquired the business, matching fronting. Option b is about verifying application info (not fronting), option c is fraud (not fronting), option d is conflict of interest (not fronting).

Answer:

a) Ramesh signed on behalf of Ramona for a life insurance client's business she acquired.