Document Properties
- Type of Publication: Advisory
- Category: Regulatory & Legislative
- Issued: November 2002
- No: 2002 - 02
Introduction:
The Insurance Business Regulations provide that a
federally regulated deposit taking institution (DTI) shall not
provide, directly or indirectly, an insurance company, agent or
broker with any information respecting a customer of the DTI in
Canada, except as permitted by these regulations. This
advisory provides clarification on how OSFI interprets this
prohibition in the context of certain arrangements between DTIs
and insurance companies, agents or brokers to market the DTI’s
products or services.
Legislative References
- Section 6 of the Insurance Business (Authorized Foreign
Banks) Regulations
- Section 8 of the Insurance Business (Banks) Regulations
- Section 8 of the Insurance Business (Trust and Loan Companies)
Regulations
Interpretation:
These regulations govern the extent to which a
DTI may undertake the business of insurance and the relations
between DTIs and insurance companies, agents or brokers. In
particular, they:
-
specify when a DTI may provide advice in respect of an
insurance policy or services in respect thereof;
-
restrict the promotion of an insurance company, agent, broker
or insurance policy by a DTI; and
-
limit the flow of information from a DTI to an insurance
company, agent or broker.
Several inquiries have raised an interpretation issue
specifically with regard to the flow of information between a DTI
and an insurance company, agent or broker in the context of an
arrangement that, on the one hand, allows a DTI to gain additional
business, and on the other hand, permits the insurance company,
agent or broker to offer a broader spectrum of financial products
or services to its clients. Under such an arrangement, where a
client of an insurance company, agent or broker is interested in a
particular product or service offered by a DTI, a representative
of the insurance company, agent or broker would collect the
personal and financial information necessary to forward the
client’s application to the DTI for processing. Further to its
review of the application, the DTI would communicate to the
representative of the insurance company, agent or broker whether
it is willing to supply the requested service or product to the
applicant, and if so, under which terms and conditions it is
prepared to do so. Lastly, the client would either accept or
reject the DTI’s proposed terms and conditions.
These queries involved two issues:
-
when does a client of an insurance company, agent or broker
become a customer of a DTI; and
-
what constitutes “information respecting a customer” of a
DTI.
In its assessment of whether such arrangements are subject to the Insurance Business Regulations, OSFI will consider the
following:
-
whether the DTI would provide any information to an insurance
company, agent or broker for the purpose of identifying
potential clients for the insurance company, agent or broker
(it should rather be the insurance company, agent or broker
that would promote the products and services of the DTI to its
clients);
-
with respect to a product or service that a client of an
insurance company, agent or broker is seeking from the DTI,
when would the client become a customer of the DTI (it should
not be until the DTI is notified of the acceptance of its
terms and conditions for the product or service by the client
of the insurance company, agent or broker);
-
whether the only information provided by the DTI to an
insurance company, agent or broker would be information
respecting the DTI (information that is acceptable would
include general information regarding the DTI’s services and
products, and the terms and conditions under which the DTI is
prepared to enter into a specific transaction with a client of
the insurance company, agent or broker); and
-
whether the DTI would provide to an insurance company, agent
or broker, information pertaining to the credit worthiness of
a client of that insurance company, agent or broker (the DTI
should not provide such information).