Notice of Proposed Cease and Desist Order and Interim Cease and Desist Order Against Axccess Lifestyle Membership Corporation and Robert Mattacchione

REGARDING the Insurance Act, R.S.O. 1990, c. I.8, as amended (the “Act”), in particular section 441

 

AND REGARDING a Proposed Cease and Desist Order against Axccess Lifestyle Membership Corporation and Robert Mattacchione

 

AND REGARDING an Interim Cease and Desist Order against Axccess Lifestyle Membership Corporation and Robert Mattacchione.

 
 

NOTICE OF PROPOSED CEASE AND DESIST ORDER

and

INTERIM CEASE AND DESIST ORDER

 
 
The Superintendent of Financial Services ("Superintendent") is of the opinion that Axccess Lifestyle Membership Corporation (“Axccess”) and its sole Director, Robert Mattacchione, has or have committed unfair or deceptive acts or practices by making false or misleading statements as to the terms benefits or advantages of any contract of insurance issued or to be issued.  The particulars are set out in the Report of the Superintendent which will be served upon Axccess and Mr. Mattacchione with this Notice and Order. 
 
Pursuant to section 441(2) of the Act, the Superintendent intends to order Axccess and Mr. Mattacchione, and any of their agents, representatives and successors thereof, to: 

 

A. Immediately cease making and/or publishing any statements, written or otherwise, to the effect that Axccess Lifestyle Membership Corporation can arrange for, secure, or facilitate insurance coverage provided by Lloyd’s Canada. 

 

B. Immediately cease making and/or publishing any statements to the effect that Axccess Lifestyle Membership Corporation can arrange for, secure, or facilitate insurance coverage whose clearance and brokerage is provided by Chesterfield Insurance Brokers Limited, and/or Chesterfield Insurance Brokers Ltd., and/or Chesterfield Canada Inc.

 
WITHIN 15 DAYS after receiving this notice, the persons named in this notice may request in writing that the Financial Services Tribunal (“Tribunal”) hold a hearing before the Superintendent takes any action described in this notice.
 
IF NO HEARING IS REQUESTED within 15 days, the Superintendent may make a permanent order in accordance with this notice, which shall take effect on the date set out in the order.
 
Any request for a hearing should be directed to:
 
Financial Services Tribunal
5160 Yonge Street
Toronto, Ontario M2N 6L9
Fax No.: (416) 226-7750
 
Attention: Registrar
 
If a hearing is requested, section 441(8) of the Act provides that if the Tribunal is of the opinion that a Cease and Desist Order should be made, the Tribunal may make an order which shall take effect on the date set out in the Order.
 
At the hearing, your good character, propriety of conduct or competence may be in issue.
 
The hearing before the Tribunal will proceed in accordance with the Rules of Practice and Procedure of the Financial Services Tribunal under the authority of the Statutory Powers Procedure Act, R.S.O. 1990, Chapter S.22.  The Rules of Practice and Procedure are available at the website of the Tribunal: http://www.fstontario.ca.  Alternatively, a copy can be obtained by telephoning the Registrar of the Financial Services Tribunal at (416) 226-7294, or toll free at 1-800-668-0128 ext. 7294.
 
You may be furnished with further or other particulars in respect of any matter herein or in respect of any other matter, including further grounds to impose a Cease and Desist Order.

INTERIM CEASE AND DESIST ORDER

 
Pursuant to section 441(4) of the Act, the Superintendent is of the opinion that the interests of the public may be prejudiced or adversely affected by a delay in the issuance of a permanent order for the following reasons:
 
  1. Axccess has been promoting the sale to the public of “memberships” in Axccess Lifestyle Membership Corporation for $399.  That offer was directed by email to members of the public and financial advisors who were in turn encouraged to offer this product to their clients.  
  2. According to promotional material, membership in Axccess carries with it the opportunity to purchase an insurance package which covers one home and two automobiles for a five year term at a prepaid cost of $7797, with a “no claim bonus rebate” of $2,000 to be paid at the end of the five year term. That premium would be about 50% less than the premium for similar coverage in the regular insurance market.
  3. According to the promotional material, the insurance coverage provided under this plan would be provided by Lloyd’s Canada (Lloyd’s) through Chesterfield Insurance Brokers Ltd., an insurance broker. 
  4.  Lloyd’s has advised that Axccess does not hold, and has never held, any authority from Lloyd’s that would allow it to bind or accept insurance, or issue insurance documentation on behalf of Lloyd’s.
  5. Chesterfield Insurance Brokers Limited is a fully accredited Lloyd’s broker and registered in the United Kingdom. Chesterfield Canada Inc., is an insurance broker registered in Ontario with the Registered Insurance Brokers of Ontario, the regulatory body governing insurance brokers in Ontario.
  6. Chesterfield Canada Inc. has advised that contrary to the promotional material, Chesterfield Canada Inc., Lloyd’s Canada, and Chesterfield Insurance Brokers Limited are not providing any brokerage support for the Axccess product and that the use of the Chesterfield and Lloyd’s names and logos in the promotional material “are false and without their explicit permission.”
  7. Based on the above, it appears that the statements in the promotional material to the effect that membership in Axccess carries with it the opportunity to purchase low cost insurance from Lloyd’s, brokered through Chesterfield Insurance Brokers Ltd., is false and misleading. 
  8. The Insurance Act provides that no person shall engage in any “unfair or deceptive act or practice”.
  9. Ontario Regulation 7/00, made under the Act, defines an unfair or deceptive act or practice to be (among other things), “Any false or misleading statement as to the terms benefits or advantages of any contract or policy of insurance issued or to be issued”.
  10. The Superintendent is of the opinion that in the circumstances described above, Axccess Lifestyle Membership Corporation and its director, Robert Mattacchione have made, or have been responsible for making, false or misleading statements about the terms, benefits or advantages of a policy of insurance to be issued: specifically that coverage would be available to members of Axccess from Lloyd’s Canada and brokered through Chesterfield Insurance Brokers Limited. 
  11. It appears that the public is at risk. Axccess’ promotional material asks that “subscribers” commit to insurance coverage for a five year period upon the immediate payment of $7797. The promotional material invites the public to purchase, and invites financial advisers to promote, a product that does not exist as described, and which may not exist at all.  
  12. In these circumstances, it is appropriate to issue an immediate order requiring that Axccess Lifestyle Membership Corporation and its director, Robert Mattacchione cease and desist making and/or publishing any statement to the effect that insurance coverage is available to members of Axccess provided by Lloyd’s Canada and/or that brokerage for such coverage may be provided by Chesterfield Insurance Brokers Limited, and/or Chesterfield Insurance Brokers Ltd., and/or Chesterfield Canada Inc.   
 
In accordance with section 441(4) of the Act, the Superintendent, without prior notice, may make an interim order which will take effect immediately.

INTERIM ORDER

 
Effective this date, pursuant to section 441(4) of the Act, the Superintendent orders that Axccess Lifestyle Membership Corporation and Robert Mattacchione, and any agents, representatives and successors thereof:
 
A. Immediately cease making and/or publishing any statements, written or otherwise, to the effect that Axccess Lifestyle Membership Corporation can arrange for, secure, or facilitate insurance coverage provided by Lloyd’s Canada. 
 
B. Immediately cease making and/or publishing any statements to the effect Axccess Lifestyle Membership Corporation can arrange for, secure, or facilitate insurance coverage whose clearance and brokerage is provided by Chesterfield Insurance Brokers Limited and/or Chesterfield Insurance Brokers Ltd. and/or Chesterfield Canada Inc.  
 
If a hearing is requested pursuant to the Notice of Proposed Cease and Desist Order, the Superintendent may extend the Interim Cease and Desist Order until the hearing before the Financial Services Tribunal is concluded.
 
Section 447(2)(b) of the Act provides that any person who fails to comply with any order made under the Act is guilty of an offence and liable on first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.
 
Section 447(4) of the Act provides that every director, officer, and chief agent of a corporation who caused, authorized, permitted or participated in a corporation committing an offence, or who fails to take reasonable care to prevent a corporation from committing an offence, is also guilty of an offence and is liable on first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.
 
 
ISSUED AT the City of Toronto, this 20 day of October, 2011.
 
 
Philip Howell
Superintendent of Financial Services
 
 
 
TO:                Axccess Lifestyle Membership Corporation
                     ICC Global Group
                     665 Millway Avenue, Suite 38
                     Concord, Ontario
                     L4K 3T8
 
AND TO:         Robert Mattacchione
                     79 Selvapiano Cresent
                     Woodbridge, Ontario
                     L4H OX1
                    
 
AND TO:         Stephen Scharbach
                     Financial Services Commission of Ontario
                     Legal Services Branch
                     5160 Yonge Street, Suite 1700
                     Toronto ON  M2N 6L9
                     Tel: 416-590-7244
                     Fax: 416-590-7556