It’s official: Banks now banned from promoting non-authorized insurance on their Web sites

Canada’s new regulations prohibiting banks from promoting unauthorized insurance products and services on their Web sites are now official.
The regulations came into force with very few amendments to the pre-published draft of regulations posted for public comment on Feb. 12, 2011.
The only changes were to clarify that the new regulations apply to the banks’ “business in Canada.” Also, the ban on Web site insurance promotion does not apply if the banks are promoting insurers that deal “only” in authorized types of insurance (as defined by statute).
Under the section ‘Web Promotion,’ the regulations state:
“[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 a policy, that is not of only an authorized type of insurance.”
In the Canadian Gazette, where the regulations are published (http://www.gazette.gc.ca/rp-pr/p2/2011/2011-10-12/pdf/g2-14521.pdf), the federal government says the new regulations “are required to extend government policy to the Web pages of deposit-taking financial institutions in a similar fashion as the regulatory framework that applies to insurance activities in branches.”
Banks are currently not allowed to promote non-authorized insurance products and services in their branches.
The Insurance Brokers Association of Canada (IBAC), which has been lobbying the federal government for these changes for years, said it was “pleased” with the introduction of the new regulations.
“The announcement today by the government extends and clarifies the protection insurance consumers currently are afforded in bank branches from coercive and predatory pressures when it comes to their insurance needs,” IBAC says in a press release. “This consumer empowerment now covers the on-line world.”
IBAC CEO Dan Danyluk said: “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.
“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.”