Feds to prohibit banks from promoting, selling insurance on their websites

Current federal regulations prohibit banks from promoting or selling unauthorized insurance products in their branches. However, in recent years, some banks have been engaging in these activities through their web pages.

“We want to ensure the Bank Act reflects the new reality of online banking, to avoid attempts by banks to do on their websites what they are prohibited from doing at their branches,” said Menzies. “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.”

The government proposed the regulatory amendments earlier this year, following a public consultation. The finalized regulations will be available in the Canada Gazette.

Independent insurance brokers applauded the announcement.

“The Insurance Brokers Association of Canada (IBAC) is pleased to see the publication of regulations by the Government of Canada that will further protect Canadian consumers ofinsurance,” said Dan Danyluk, CEO of IBAC. “We applaud the Government of Canada for taking a strong stand in favour of consumer choice.”

The banking industry, however, has opposed these rules, arguing that they could have a damaging effect on consumer choice and competition in the insurance market.

But Menzies said the rules will ensure fair competition, and will allow Canadians to make the best choice when buying insurance products.

“These regulations strike a balance between limiting the types of insurance banks are allowed to sell and promote on their web pages and providing consumers choice and transparency in their dealings with financial product providers,” said Menzies.