Licensees who are sued in court for breach of fiduciary duty or fraud may face claims for the return of commissions or profits, in addition to claims for compensatory damages.
The Indemnity Plan does not cover “a claim relating to or arising out of the gain of a personal profit or advantage to which an Insured is not legally entitled” (Exclusion 11 in the Indemnity Plan). These claims may also be excluded by other provisions of the Indemnity Plan. If you engage in the type of activity that may result in an order for you to give up commissions or fees (called a disgorgement order), either to the BC Financial Services Authority or to a party in a lawsuit, you should be prepared to repay the money out of your own pocket.
In addition, you will not have coverage for a claim triggered when you press for payment of a commission or fee. Exclusion 6 in the Indemnity Plan sets out that the Indemnity Plan does not apply to “a claim precipitated by an attempt to collect a commission or fee.”
