RIBO reminds brokers of credit card transaction rules

In its latest Bulletin, the Registered Insurance Brokers of Ontario (RIBO) is reminding brokers that there are potential compliance implications to accepting credit card payments for insurance premiums.

RIBO notes that the use of credit cards to pay for insurance premiums is now as common as writing a cheque but stresses that it is important to remember that a broker’s personal credit card or the brokerage’s corporate credit card may not be used to remit or process the client’s premium payments as this is in non-compliance with Ontario Regulation 991, Section 16.

The regulation requires that trust monies be deposited into the trust account in the form it was received within 3 banking days. Credit card payments by the brokerage or broker to the insurer on behalf of a client would not comply nor qualify as “trust funds” as it is not the brokerage who forwards the premium monies to the insurer but the credit card facility of the credit card issuing bank, thereby breaking the flow of “trust” monies. An acceptable form of electronic payment under the regulations is electronic funds transfer.

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