Member of Parliament tables legislation to limit banks in insurance business

A private member’s bill tabled in the House of Commons on Oct. 7 calls for amendments to the Bank Act that would limit banks’ activities in the insurance business.
Alexandra Mendès, MP for Brossard–La Prairie in Quebec, introduced the bill. It includes four key amendments intended to prevent banks in Canada from having an undue advantage over independent insurance companies, agents or brokers.
Specifically, the bill clarifies the term ‘telecommunications,’ by adding the word ‘Internet.’
“This amendment alone shows how outdated these regulations truly are,” Mendès said in a statement.
The Office of the Superintendent of Financial Institutions (OSFI) ruled in June 2009 that a bank’s Web site is not a “branch,” and thus a bank is allowed to promote and sell insurance products or services on its Web site.
The Insurance Brokers Association of Canada had asked OSFI to clarify the issue of whether or not a bank that promoted and sold insurance through its Web site constituted a breach of the Bank Act.
OSFI ruled that the Bank Act’s definition of “branch” refers to physical premises.
“The banks have been using outdated regulations to the disadvantage of the independent insurance brokers, companies and agents to advance their own insurance agendas,” Mendès said. “The regulations have been inappropriate for years. It’s time to clarify these laws and this bill will hopefully be a starting point for a more in-depth discussion and a thorough review of this antiquated piece of legislation.”