Feds publish draft regulations prohibiting banks from promoting unauthorized insurance on Web sites

Canada’s Department of Finance has published proposed amendments that would prevent banks from promoting non-authorized insurance products on its Web sites.
Also in its proposed amendments, the government would prohibit banks from carrying on business “adjacent to the premises of an insurance company, agent or broker” unless the bank “clearly indicates to its customers” that its bank business and premises “are separate and distinct” from the adjacent insurance operations.
Interested parties have 30 days from Feb. 3, 2011 to relay any comments to the government about the regulations.
The regulations are a follow-up to the federal government’s stated intention in 2009 to develop regulations that would include bank Web pages within the general prohibition on banks from promoting certain types of insurance services.
“The proposed regulations were made necessary by the evolving use of technology by deposit-taking financial institutions,” the Department of Finance said in its explanatory notes to the proposed new regulations. “In recent years, a number of deposit-taking financial institutions have undertaken, through their Web pages, activities relating to the sale and promotion of insurance products; some of these activities would not be authorized to be conducted in their physical branches.”
The proposed amendments for Section 2, subsection 7.1(1) of the Insurance Business Regulations read in part:
“A bank shall not, on a bank Web page, provide access to a Web page – directly or through another Web page – through which there is a promotion of
(a)    an insurance company, agent or broker that does not deal only in authorized types of insurance; or
(b)    an insurance policy of an insurance company, agent or broker, or a service in respect of such a policy, that is not of only an authorized type of insurance.”
A “bank Web page” is defined as “a Web page that a bank uses to carry on business in Canada, including any information provided by the bank that is accessible on a telecommunications device.
“It does not include a Web page that is only accessible by employees or agents of the bank.”