Bank Act review: Fear-mongering does consumers a disservice

For Immediate Release
April 27, 2006

TORONTO – The Canadian Bankers Association was disappointed to see that the Canadian Federation of Independent Business (CFIB) and Advocis are completely ignoring the facts and using fear-mongering against a proposal that would improve consumer access to insurance product information.

The CFIB and Advocis are trying to mislead consumers by saying that, if the changes the banking industry is proposing were to happen, banks would be able to use the health and medical information collected to make decisions about loan or credit applications and would engage in coercive tied selling.

“Both of these practices are prohibited and they do not happen,” said Raymond Protti, President and Chief Executive Officer of the Canadian Bankers Association. “To the detriment of Canadian consumers, the CFIB and Advocis are opposed to the proposed changes for self-interested reasons. Without the facts on their side, they are spreading unnecessary fear and false accusations about what would happen if the banking industry’s proposed changes were adopted—changes that research shows Canadians support.”

Laws and other measures prevent medical and health information from being shared with third parties. The federal personal information privacy legislation is among the best in the world and there is a bank insurance code of conduct in place which prohibits the sharing of health and medical information or using such information to assess loans or marketing any other product. Further, this code is monitored by the federal government regulator, the Financial Consumer Agency of Canada (FCAC).

In addition, banks have long had policies to prohibit coercive tied selling and Parliament passed a coercive tied selling prohibition in the Bank Act in 2001. The FCAC monitors and enforces banks’ compliance with the legislation. These safeguards are so strict that even the Insurance Brokers Association of Canada said, in their submission to the federal government on the Bank Act review, that the prohibitions address the matter “to their complete satisfaction”.

Canadians also dismiss the view that they “would feel coerced into purchasing insurance” from a bank affiliated source. In fact, according to February 2006 research by The Strategic Counsel, 91 per cent of Canadians say banks are just additional sources of information about insurance products and they would not feel obligated to get their insurance through the bank source.

Banking Industry Proposed Changes to Improve Consumer Access to Insurance Information

The changes that the banking industry is proposing would not affect any of the strong consumer protection measures about privacy or coercive tied selling that are already in place.

Banks have been allowed to sell insurance products, such as life and property and casualty insurance, through separate insurance companies for more than a decade, but consumers currently are not able to access information about many bank insurance products in one of the most logical places: a bank branch. In its submission to the federal government as part of the review of the Bank Act, the banking industry is proposing four simple changes that will benefit consumers and give them more access to information when making important choices about insurance. The industry believes that consumers should be able to:

• Get insurance product information, like a brochure, from a bank branch
• Gve their bank permission to have tailored insurance product information sent to them
• Give their bank permission to share information with an insurance professional to obtain insurance information
• Get a referral from bank branch personnel, like their account manager, to a qualified insurance professional outside of the branch

“It is difficult to see how the CFIB and Advocis think that keeping consumers in the dark about their insurance choices and restricting their access to information protects consumers. A consumer informed about insurance choices: now that makes sense,” Mr. Protti said. “I don’t think that fear-mongering is constructive or helpful to a rational debate on this issue and does consumers and small business owners a disservice. It is time to put the interests of consumers first. It is time to back consumers.”

The Canadian Bankers Association is an industry association representing the domestic and foreign chartered banks of Canada and their 249,000 employees.

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For more information:
Melanie Minos, Manager, Media Relations
Tel: (416) 362-6093, ext. 220
Cell: (416) 587-7733
E-mail: mminos@cba.ca