TORONTO (Reuters) - The Canadian government will prevent the country’s banks from selling financial products that function like life-insurer annuities, products that pay out predetermined returns regardless of market fluctuations.
In a statement late on Friday, the finance ministry said it was making the move to clearly delineate the line between banking and insurance activities.
Under current laws, only insurers can offer annuities.
“However, in recent years, some banks have introduced products that perform the same or similar functions as life annuities. These products are not subject to the same regulatory standards as those sold by insurance companies,” the finance ministry said.
The legislative amendments will be proposed “as soon as possible” and will allow the grandfathering of existing products, it said.
Reporting By Cameron French; Editing by Peter Galloway