Are banks playing by the rules?

We once worked with a credit union client on a complex system of cross-referrals slips to get around barriers imposed by Ficom that keep credit union members separate from the insurance side of the credit union business. It was interesting to see banks have the same challenge.

In a Globe and Mail article titled "A piece of drywall away from being..." Tara Perkins wrote "If a customer walks into the banking side of the RBC location in Oakville and asks an employee if they know where they can buy some car insurance, the employee's likely to squirm. Responding with "we sell insurance," or "next door," or even just pointing to the insurance office, could be breaking the law. They're instructed to hand over a generic brochure about insurance that does not promote RBC."

So I thought, let's test this. My assumption is that even though there are no bank insurance offices near any of the bank branches here in Chilliwack, since it's a Canada Bank Act law, the response to my scenario should be the same.

My scenario:

"I need to buy life insurance on my home equity line of credit and other insurance on my home. Can I get that here?"

Let's see how the big 5 did:

  • RBC: They had an insurance brochure in their rack, which they helpfully gave me. The insurance discussion would be handled over the phone, with payments for premiums withdrawn from my RBC account. However there was no hesitation to tell me about their insurance services, and while the insurance brochure was very plain, it definitely wasn't the "generic brochure about insurance that doesn't promote RBC," since "RBC..." is on the top left corner of every page.
  • CIBC: I got a pretty blank look at my home insurance question. She didn't really have an answer for that. About home equity insurance, I was told I could only get insurance on their own mortgages. She said she could get me a brochure about it, but the way the desk was attached to her leaning arm, I didn't think it would be soon in coming.
  • Scotia: If I bring my mortgage/LOC over they can insure it (life, disability, etc.) I made a point of relating how my credit union has a separate branch for insurance and would I have to go somewhere other than that specific branch, or could they look after it right there, and they assured me they could.
  • TD Canada Trust: No life or disability insurance available. They can provide credit insurance on mortgages and lines of credit. I think this is a 'ding-ding' for TD! However, when I visited a different branch, they had wicket posters advertising insurance. Huh?
  • BMO: Hey, they told me they weren't allowed to talk about insurance in the branch! And when she tried to find a phone number for me on her computer, there wasn't one. BMO obviously takes this insurance separation seriously. I asked why she couldn't talk about insurance and she replied 'I guess because we aren't an insurance company?' with a question in her voice. She was so nice about helping me, though, that I wanted to reward her with one of the BMO mints hanging out on her counter. But I knew it would blow my cover.

This is obviously a complex subject, governed by complex legal documents written by legislative types intent on job security. Why does it matter whether or not I can buy insurance from my f.i.? Wouldn't that be doing me, the member/customer, a service?

If anyone wants to enlighten me on why this is such a complex topic, feel free. But I'd much rather get a kick-ass no-bake brownie recipe.


A veritable buffet of consumption choices

Podcast 12: Credit Union Innovator Bryan Sims