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.
Asked to comment on the complaint, the bank sent an email reply saying only: "We are committed to regulatory compliance and respect the Bank Act and privacy legislation."
Meanwhile, the IBAC said it didn't believe the letter sent to one of its members was an isolated case.
"We've actually got copies of six letters to six different people," Masnyk said. "We've only sent one letter as an example in our complaint to OSFI, but we are aware that five other people have received exactly the same letter."
Just what will happen as a result of the complaint may never be known, he added.
OSFI acknowledged the complaint in an email reply but said that all deliberations with the bank, including any resolution, had to remain confidential under the Bank Act.
"So they will not be giving us, or anybody for that matter except the bank, any notice of how this issue is resolved," he said.
Masnyk said the IBAC understands the issue of confidentiality when it comes to solvency issues and other internal matters involving financial institutions that OSFI supervises.
"(But) when it comes to actual market conduct, it's a bit surprising to hear from OSFI that no public statement or public resolution will ever be made by OSFI."
Flaherty's office was notified of the complaint before it was sent to OSFI, but there has been no indication of what action, if any, was being taken.
Beyond acknowledging the complaint "we haven't heard anything from the minister's office," Masnyk said.
Flaherty spokesman Chisholm Pothier said the minister was aware of the complaint and the fact that OSFI is looking into it.
"We are awaiting the result of that investigation," Pothier said in an email, adding that that message had been conveyed to the IBAC.