Ottawa New Rules for Online Bank Insurance
Ottawa has completed a round of consultations with the insurance and banking industries about its decision to stop banks from marketing insurance on their websites, and is now crafting a plan for putting the rules in place.
According to a letter that the Insurance Bureau of Canada (IBC) sent its members, the Department of Finance sought input from the industries on how to implement its proposal. The government’s specific concerns illustrate the challenges it faces in applying the laws that govern bank branches in the online environment.
“How should the concept of a bank branch be translated into bank websites?” the letter asked. “Should there be a distinction between websites for the corporate bank group, retail banking site open to the general public, and secured bank website for existing customers only?”
Finance Minister Jim Flaherty dealt an unexpected blow to the banks in mid-October when he faxed their chief executive officers to notify them that he intended to stop them from marketing insurance products online.
He said he is trying to replicate the laws that govern banks on the ground. The Bank Act prohibits banks from selling or even marketing insurance in their branches, but allows them to own separate insurance companies and offices. The rules have been becoming less relevant as more and more Canadians shop for financial products online.
And it is that point about consumers’ growing use of the Internet for their financial needs that Nancy Hughes Anthony, CEO of the Canadian Bankers Association, says should govern regulations.
“It is our view that what the federal government proposes will limit how and where consumers can access information about insurance. We live in the Internet age, where consumers are doing their research and shopping around online for a wide variety of products and services, including financial products,” Ms. Anthony said.
“The Internet is a convenient way to get information and do comparison shopping without any obligations to buy. Imposing artificial and inconvenient barriers is not in the best interest of consumers.” Source
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