With the recent passage of Bill 11 in Newfoundland and Labrador allowing credit unions to retail insurance directly from their branches, consumers should be very careful about how much business they place with the credit unions warns Advocis, The Financial Advisors Association of Canada.

“This is a disappointing move on the part of the Newfoundland and Labrador government,” says Greg Pollock, president and CEO of Advocis. “The government is putting consumers at considerable risk and apparently doesn’t even realize it.”

A primary issue of concern is the seemingly open-door access to all the private information about a customer. “There is nothing in this newly passed legislation to truly safeguard a credit union customer’s personal information,” Advocis says.

“Any precautions that are in place are difficult to monitor and enforce,” it adds.

“Do you really think that someone who fails a medical for life insurance is going to qualify for a small business loan? I think not,” explains Pollock. “A credit union client’s private health information is fair game. Credit union personnel will now have total control over a consumer’s personal information. No, this is not good news for consumers,” he says.

Another major concern for Advocis is the increased risk of tied selling. With the passage of Bill 11, if someone obtains a product from a credit union such as a mortgage, they are open to being pressured to have the credit union handle all of their insurance needs, Advocis warns.

Pollock posits a situation where a client is signing mortgage papers at the local credit union with the credit union’s personnel suggesting to purchase life insurance at the same time. This may not necessarily be the best decision for the client at that time.

“One-stop shopping is not always the best option,” said Pollock.

IE