Keep insurance out of banks, says Advocis

Advocis is fighting back against a proposal to offer insurance information in bank branches, saying that Canadians are concerned about the use of their personal information, as well as sales pressure at the banks.

A survey released on Thursday, conducted by Pollara for Advocis, indicates that 78% of Canadians believe that the current prohibition on banks providing information about life and health insurance, or referring customers to insurance companies, should be kept in place.

The federal government is currently reviewing the Bank Act and a separate survey released on Wednesday by the Canadian Bankers Association suggested that the majority of Canadians want easier access to insurance information in bank branches.

The CBA survey, conducted by The Strategic Counsel, found that 91% of respondents agreed that it was “a good idea” to provide consumers with “as many choices as possible for information about insurance products, including bank branches.”

Michael Marzolini, chair of Pollara, wouldn’t comment on the CBA’s survey, but noted that the wording of the questions may account for the contradictory conclusions of the two polls.

“The survey is not the issue, privacy is the issue,” said Advocis president Steve Howard at a Toronto news conference. “On the surface of it, most people would say they do want more information [about insurance]. “But if you asked in the context of ‘Would you like more information at the price of your privacy and sales pressure,’ the answer is no.”

More than 90% of consumers participating in the Pollara survey believe that banks already have enough information about them and 81% said they have enough access to life and health insurance information in general.

Canadians seem concerned about the protection of their personal information and how it might be used once it gets into the hands of the banks, Howard added.

“Clients of our members report feeling pressure when they go into bank branches,” said Howard. “In fact, one in five Canadians report they have felt pressure to give more business to the banks following the approval of a loan, line of credit, or mortgage product.”

If customers are required to buy a product or service as a condition for obtaining another, that practice is known as tied selling, which is strictly prohibited and, the banks would argue, no longer an issue. Howard disagrees. “Even though steps have been taken to legislate against coercive tied selling, consumers have little knowledge of those safeguards.”

“We represent 12,000 financial advisors and we sit down at their kitchen tables,” Howard said. “We hope concerns about privacy protection and the avoidance of sales pressures continue to be respected, as they are under current legislation.”

In the past, there have been suggestions that Advocis would support banks selling insurance, as long as advisors selling such products were properly trained, licensed and accredited. But it seems that’s no longer the case.

“It’s difficult to imagine that the banks would be able to deal with the issue of sales pressure,” said Howard. “That has to be respected and that’s why we think the current restrictions should be maintained.”

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