Brokers want confidentiality rules changed

Brokers want confidentiality rules changed

Brokers want confidentiality rules changed

Canadian insurance brokers are seeking a legislative change to the Bank Act so they can find out what happened to their complaints this year about banks’ adherence to regulations concerning insurance sales.

The Insurance Brokers Association of Canada (IBAC), representing 36,000 property and casualty brokers across the country, brought forward three complaints in 2012 about banks’ conduct to the Office of the Superintendent of Financial Institutions (OSFI).

Two complaints in April related to the compliance of RBC and the Bank of Montreal to new regulations in Canada that prohibit banks from selling unauthorized insurance on bank websites. Both banks have maintained publicly that they are in compliance with the rules.

In the third complaint, brokers accused RBC last month of selling insurance to consumers based on information the bank had obtained from its credit card holders.

To date, brokers haven’t heard back from OSFI on any of their complaints. Nor will they, since Section. 636(1) of the Bank Act in Canada says all discussions between OSFI and the banks related to the enforcement of the Bank Act must be kept confidential.

IBAC says it understands the need for confidentiality when OSFI is dealing with banks about regulations concerning prudential or solvency issues. But IBAC believes matters that relate to market conduct should not be kept confidential.

“Interactions between Canadians and banks should not be confidential, whether the banks are following the rules or not,” IBAC representative Steve Masnyk told Insurance Business. “This blanket confidentiality needs to be reviewed when it comes to market conduct. That’s something we hope to raise with the department and the legislators over the next couple of months. Perhaps the legislation needs to be re-thought.”

OSFI says the confidentiality rules are in place because “to confirm or deny the existence of an investigation could unnecessarily cause harm to a financial institution.”

“Where a complaint is within our mandate, OSFI takes appropriate action to address the concern directly with the financial institution,” OSFI communications officer Léonie Roux says. “OSFI usually discusses the matter with the financial institution to confirm the facts and asks the financial institution to justify the legality of its actions.

“If OSFI is of the view that the financial institution is in violation of the law, it requests the financial institution to rectify the situation and comply with the governing legislation. OSFI does not disclose the outcome of these matters.”

 

3 Comments
  • Frank Robinson 2012-09-12 1:06:47 AM
    I understand not knowing about an OSFI investigation of the banks. But if you can't know the outcome of a complaint, how is the public going to know whether or not they have been protected? Do they just have to remain diligent in seeing whether or not the laws have been complied with? It's as if the onus falls on the public to check banks' compliance with the law in the absence of knowing whether or not OSFI has taken any action.
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  • Thom. Young 2012-09-12 3:17:21 AM
    Where's all this transparency that those of us in the Insurance business are held to account for? One of the essential reasons for full disclosure of illegal or even questionable actions by the banks is the threat of public exposure of their actions. If there is no threat to be exposed and the penalty if any is private between the regulator and the bank where's the public protected by the regulation?

    Perhaps the brokers association should move to a civil action for the damages caused by the banks and their insurance subsidiaries actions. First witness called could be the investigator from OSFI?
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  • Brayan 2012-11-14 1:24:03 AM
    No. They don't all charge the csoeumtr. If they do it shouldn't be too high, less than $ 50.However, there are plenty that don't charge at all. They get their fees from the insurance companies that they recommend to you. You can even use online brokers to get an idea of the best prices available for free and then go directly to the company you think is the best and get an even better deal through them if you be sure to check into all the available discounts.
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