Advocis, CBA continue war of words

Advocis and the Canadian Bankers Association are maintaining their battle over the question of banks and the marketing of life and health insurance in branches.

The 12,000 member advisor association released a Pollara survey on Thursday, backed by the Canadian Federation of Independent Business, suggesting that 76% of small business owners believe that existing measures keeping insurance information out of the banks should be kept in place due to privacy concerns and the issue of tied selling.

The CBA immediately fired back, accusing Advocis of “fear-mongering” and spreading misleading information. Privacy laws and bank codes of conduct prevent medical and health information from being shared with third parties, the CBA said. “In addition, banks have long had policies to prohibit coercive tied selling and parliament passed a coercive tied selling prohibition in the Bank Act in 2001.”

“Both of these practices are prohibited and they do not happen,” said CBA president Raymond Protti. “To the detriment of Canadian consumers, the CFIB and Advocis are opposed to the proposed change for self-interested reasons. Without the facts on their side, they are spreading unnecessary fear and false accusations about what would happen if the banking industry’s proposed changes were adopted — changes that research shows Canadians support.”

Late Thursday, Advocis chair Gary McLeod responded to Protti’s comments. “We’re not accusing the banks of anything,” he maintained. “We are saying that under no circumstances should banking and health and medical information come together, that includes within a banking group. This would be an intolerable threat to consumer privacy. And that’s why these protections were put in the Bank Act in the first place and that’s why they should remain.” A review of the act is expected later this year.

“We’re raising a legitimate concern about the appropriateness of collecting, sharing and trading personal information in order to get more business,” McLeod adds. “When it comes to information like one’s personal health and medical history, we believe that privacy must come first. On this important issue, we must always err on the side caution and defend the consumer’s interest.”

McLeod also accused the CBA of “throwing stones from a glass house” by accusing other associations of acting out of self-interest. “The banking industry is proposing its changes in order to sell more of its products, period.” The CBA has not asked for permission to directly sell life and health insurance products in branches, but does want to offer information to clients and allow employees to provide referrals.

And not all Advocis members support McLeod’s position. In an e-mail to Advisor.ca, Niall Murphy of Monymap Financial Services in Delta, B.C., says he agrees with Protti. Murphy was on the Advocis Public Affairs Committee, which drafted the association’s official position on this issue, which would allow banks to distribute insurance, as long as it’s done on a “level playing field” basis.

“Advocis passed motions at its last annual general meeting [last year] supporting this strategy,” Murphy added.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com