Insurance brokers file complaint against RBC and BMO

Canada’s insurance brokers have filed an complaint with the federal government against the Bank of Montreal and the Royal Bank of Canada, claiming the large banks are treading outside their designated jurisdiction by advertising insurance services online.

In 2009, Finance Minister Jim Flaherty announced that Canada would maintain a strict separation between the banking and insurance sectors. The removal of barriers between the two industries in the U.S. has been widely credited with precipitating the 2008 financial collapse.

BMO and RBC both claim to be playing by the rules spelled out by Flaherty, which came into effect on March 1. But the Insurance Brokers Association of Canada has sent a letter to the Office of the Superintendent of Financial Institutions (OSFI) alleging that the two banks still have information posted on their websites that contradicts the new rules.

“This all started two-and-a-half years ago when the minister asked the banks to voluntarily take the information off of their bank websites, and they said that they would comply once the regulations were in place,” brokers’ association spokesperson Steve Mansyk told the Globe and Mail. “These banks are not complying with the regulations.”