THE CEO OF the Insurance Brokers Association of Canada appeared before the House of Commons finance committee earlier this month to voice concerns with certain provisions in the federal Budget Implementation Act.
IBAC said that, among other things, the bill includes proposed amendments to the Bank Act that would give greater flexibility for financial institutions to undertake financial technology activities.
Peter Braid told Thompson’s that while financial technology provisions in the Budget Implementation Act will be safe-guarded by relevant sections in the Bank Act restricting banks’ insurance selling abilities, IBAC is still concerned that banks will be able to use financial technology companies to circumvent the law.
When he spoke before the committee, Mr. Braid reinforced IBAC’s main lobbying point: that banks should not be allowed to sell insurance at the point of granting credit.
“IBAC believes that the intent of the bill is to maintain the banks’ existing restrictions on traditional business powers (but) we have some concerns that the use of fintechs may allow banks to circumvent these restrictions, and are advocating to ensure that the regulations will prevent any unintended consequences,” he said.
“Specifically, we would like the regulations to clarify that fintech entities will be subject to the same restrictions as banks when it comes to retailing insurance or making referrals.”
He said a solid regulatory framework is imperative due to how fast technology is evolving.
“Technology moves at a rapid pace, so it will be important to ensure that the legislation and regulations are drafted to take into account future innovations,” Mr. Braid said.
“A solid regulatory framework that upholds the separation of banking and insurance would ideally encompass existing and future technology.”
He said he sees no indication that lawmakers are about to abandon that long-held law.
“I believe that the government’s intention is to maintain the historical restrictions on banks’ business powers (and) IBAC will continue to monitor this closely.”
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