Canadian legislators have long stood firm
in rejecting banks’ demands to be permitted to sell insurance in
their branches. But things could be changing, as the province of
Newfoundland and Labrador has adopted a bill permitting credit
unions to sell insurance directly from their branches.
The province’s move has provoked a negative
reaction from Advocis, Canada’s largest voluntary membership
association of financial advisers.
Go deeper with GlobalData
“This is a disappointing move on the part of
the Newfoundland and Labrador government,” said Advocis president
and CEO Greg Pollock.
“The government is putting consumers at
considerable risk and apparently doesn’t even realise it.”
Advocis puts forward its major concern as
credit unions’ access to customers’ private information which it
believes the legislation does not protect adequately.
“Do you really think that someone who fails a
medical for life insurance is going to qualify for a small business
loan?” said Pollack. “I think not.”
He continued: “A credit union client’s private
health information is fair game. Credit union personnel will now
have total control over a consumer’s personal information. This is
not good news for consumers.”
Another of Advocis’s major concern is the risk
of tied selling. As an example, Pollock posited a situation where a
client is signing mortgage papers at the local credit union with
the credit union’s personnel suggesting to purchase life insurance
at the same time.
The question, he said, becomes: will the
customer be able to truly walk away from what appears to be a good
deal to get a second opinion for their insurance needs?
“One-stop shopping is not always the best
option,” stressed Pollock.
Following the Newfoundland and Labrador lead,
credit unions in the provinces of Alberta and Saskatchewan are
pushing legislators to permit insurance sales via their
branches.
