Canada insurance brokers complain about RBC marketing
By Cameron French
TORONTO (Reuters) - Canada's insurance brokers have filed a complaint with the country's bank regulator against Royal Bank of Canada (RY.TO: Quote), the country's biggest bank, alleging the lender violated rules that prohibit banks from selling insurance alongside banking products.
The dispute is the latest in a years-long battle between insurance brokers and the banks, which already dominate Canada's investment banking and asset management industry, and are eager to push further into the insurance business.
The complaint centers on a letter sent last month by RBC to a bank client in Calgary offering insurance products, a violation of rules, the Insurance Brokers Association of Canada (IBAC) said in the complaint.
The bank client, as it turned out, was a member of IBAC, and brought the letter to the organization's attention.
"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 reads, according to a copy obtained by Reuters.
Canadian banks are allowed to sell insurance, but are prohibited from selling insurance alongside banking products or passing marketing information between the two businesses.
This is meant to keep banks from tying the selling of car loans, for instance, with buying car insurance.
The rules mean that a customer taking out a loan in a bank cannot be directed to or informed of insurance products offered by that same bank. It has led to bizarre situations such as bank branches being located next to, but not connected to, insurance offices run by that same bank. Continued...