October 11, 2011
“We want to ensure the Bank Act reflects the new reality of online banking, to avoid attempts by banks to do on their web sites what they are prohibited from doing at their branches,” said the Honourable Ted Menzies in Calgary. “We must make sure there is a level playing field where small businesses can compete, thrive and create jobs, which is why our Government announced that we would, at the earliest opportunity, ensure that banks are legally prohibited from selling and promoting unauthorized insurance products on their banking web pages.”
In order to ensure competition for financial products, current federal regulations prohibit banks from promoting or selling unauthorized insurance products in their branches. However, in recent years, some banks have acted to promote and sell unauthorized insurance products through their web pages, stated a media release.
Following a public consultation in early 2011, the Government proposed a range of technical amendments to the Insurance Business Regulations to prohibit these online activities.
The Insurance Brokers Association of Canada (IBAC) released a statement supporting the Government’s decision.
“We support the Minister of Finance in his desire for insurance consumers not to be pressured by the coercive environment Canadians face themselves when dealing with a credit grantor when they apply for credit,” said Dan Danyluk, CEO of IBAC. “The principle that credit granting institutions ought not to be selling insurance at the point where they grant credit is one that allows Canadians to make a free choice when they decide on their insurance needs; a product that is essential in so many aspects of their lives.”
Danyluk added IBAC was hopeful that two years advance notice would make it easy for banks to finally abide by the intent of the Bank Act and cease and desist selling insurance from on-line banking branches.
Minister Menzies addd, “This will ensure fair competition and allow Canadians to make the best choice when buying insurance products such as life and health insurance.”
The regulations will be available in the Canada Gazette.
This story was originally published by Canadian Insurance Top Broker.