By: Luke Jones, Published on April 23, 2018 02:34 PM, Last Update on April 23, 2018 11:35 AM
The federal government is seeking to keep banks and insurance separate through Bill C-74, and the Insurance Brokers Association of Canada (IBAC) welcomes the clear restrictions proposed. However, the association wants the bill to go further and ensure separation continues for the foreseeable future.
Introduced with the recent 2018 budget, the bill would change the Bank Act to allow financial institutions to explore more fintech. This would be achieved by expanding the networking reach of banks, allowing them to acquire newer companies. Under its current guise, the Bank Act forbids financial institutions from giving customer details to insurance companies.
This is a consumer protection rule that allows customers to shop for alternatives and not accept only the bank’s insurance offerings. IBAC says it is happy those existing limitations will remains in place, and “it will be important to ensure the historical separation between banking and insurance continues to be preserved.
“As fintechs are essentially ‘unchartered waters,’ care must be taken to ensure that the regulations continue to maintain the restrictions that prevent banks from selling insurance at the point of credit, and prevent any loopholes or unforeseen consequences that may arise through the use of emerging technologies.”
The association says it is happy to see Bill C-74 reconfirming the restrictions, but warned about the effect of regulations.
“However, as the government now moves to develop regulations, it will be important to guard against unintended consequences,” he said. “We must ensure that banks are not allowed to do through the back door what they’re prohibited from doing through the front door with regards to retailing or make referrals in the insurance marketplace.”