Legislative proposals leave out Bank Act issue

Insurers are pleased that a federal government white paper released June 14 makes no mention of changing the Bank Act to allow banks to promote insurance products in their local branches.
The finance ministry white paper is a blueprint for legislation the government will introduce to Parliament in early 2007. Its proposals do include some new measures for regulating marine insurers and reinsurers, but conspicuously absent from the document is any mention of the Bank Act issue.
“The proposed recommendations will go a long way towards eliminating red tape, improving disclosure to consumers and fostering a strong and dynamic financial sector,” said Minister Flaherty. “Proposals will also allow new technology to benefit consumers and small businesses through reduced maximum holding periods for cheques.”
Of particular interest to insurers are proposals to alter the oversight of reinsurers and companies that deal exclusively in marine insurance.
The white paper proposes to “reduce the regulatory burden for reinsurers,” by exempting reinsurers from the oversight of the Financial Consumer Agency of Canada (FCAC).
Among other things, the FCAC is responsible for ensuring that all federally regulated financial institutions have dedicated procedures and personnel in place to address consumer complaints, as well as to belong to a third-party dispute resolution system.
“Such requirements, while essential for ensuring that consumers can obtain redress of their complaints and concerns, imposes a needless compliance burden on reinsurers, as they do not deal with individuals or small businesses,” the white paper says.
The white paper also proposes to amend the Insurance Companies Act to give insurers that exclusively provide marine insurance the option to be subject to federal prudential oversight.
“Some provinces have indicated the federal government should play a larger role in the oversight of the marine insurance sector,” the white paper says.
“Moreover, it was also noted that having a clear federal oversight body for marine insurance could facilitate new entrants into the marketplace and improve competition.
“During discussions with provincial representatives, it was agreed that it would be in the best interests of consumers of marine insurance and the industry if the federal government were to provide marine insurers with the option to register with the Superintendent of Financial Institutions and be subject to federal prudential oversight, as is currently done for other types of insurance.”
Contents of the white paper are available at:
http://www.fin.gc.ca/activty/pubs/White06_1e.html#Framework