Newspaper article The Canadian Press

Insurance Brokers Says Banks Still Breaking Rules, File Complaint against RBC

Newspaper article The Canadian Press

Insurance Brokers Says Banks Still Breaking Rules, File Complaint against RBC

Article excerpt

Banks defying regulations: insurance brokers

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TORONTO - Canada's insurance brokers see no let-up in the banking sector's "defiance" of federal regulations designed to prevent it from mingling banking and insurance activities, an industry spokesman said Friday.

Steve Masnyk, public affairs manager for the Insurance Brokers Association of Canada, made the comment while discussing the industry's latest complaint filed with regulators -- this one against the Royal Bank of Canada.

The complaint centres on a marketing letter apparently sent by the insurance arm of the Royal Bank (TSX:RY) that referenced the fact that the recipient was a bank credit card holder.

"We're amazed that the banks are defying the minister on these rules," Masnyk said in an interview, adding the banks also appeared not to heed when federal Finance Minister Jim Flaherty asked them four years ago "to voluntarily stop doing insurance on the bank websites."

"Even now, as of March 1 when the regulations are in place, they're still defying the minister."

The IBAC's latest complaint, sent last month to the Office of the Superintendent of Financial Institutions, includes a copy of a letter a member of the association received which it says "attempts to leverage the customer's relationship with RBC Royal Bank in order to solicit the customer to insure his cars and home with RBC Insurance."

"As an RBC Royal Bank credit card client, you already have a relationship with RBC Royal Bank. Now you can trust RBC Insurance for your insurance needs," the letter, provided to The Canadian Press by the IBAC, reads.

The letter goes on to state that if the customer's RBC Rewards credit card is used to pay the insurance premiums, the customer can earn RBC Rewards points.

"In our view . . . it appears that they're sharing information between the banking side and the insurance side, which is black and white clearly prohibited by the regulations," Masnyk said. …

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