Toronto – June 1, 2009 – With the recent passage of Bill 11 in Newfoundland and Labrador allowing credit unions to retail insurance directly from their branches, consumers should be very careful about how much business they place with the credit unions warns Advocis, The Financial Advisors Association of Canada.
“This is a disappointing move on the part of the Newfoundland and Labrador government,” said Greg Pollock, president and CEO of Advocis. “The government is putting consumers at considerable risk and apparently doesn�t even realize it.”
A primary issue of concern is the seemingly open-door access to all the private information about a customer. There is nothing in this newly passed legislation to truly safeguard a credit union customer�s personal information. Any precautions that are in place are difficult to monitor and enforce.
“Do you really think that someone who fails a medical for life insurance is going to qualify for a small business loan? I think not,” added Pollock. “A credit union client�s private health information is fair game. Credit union personnel will now have total control over a consumer�s personal information. No, this is not good news for consumers.”
Another major concern is the increased risk of tied selling. With the passage of Bill 11, if someone obtains a product from a credit union such as a mortgage, they are open to being pressured to have the credit union handle all of their insurance needs.
Pollock posited a situation where a client is signing mortgage papers at the local credit union with the credit union�s personnel suggesting to purchase life insurance at the same time. This may not necessarily be the best decision for the client at that time. The question becomes: will the customer be able to truly walk away from what appears to be a good deal to get a second opinion for their insurance needs. “One-stop shopping is not always the best option,” said Pollock.
Advocis, The Financial Advisors Association of Canada, is the oldest and largest voluntary membership association of financial advisors and planners in Canada. With more than 10,000 advisors and planners in 43 chapters across Canada, Advocis members provide financial advice, product service and employee benefit planning to millions of Canadians in areas including estate and retirement planning, wealth management, risk management and tax planning. For more information about Advocis, visit www.advocis.ca.