The federal government will introduce legislation to prevent banks from offering financial products that function like life annuities, finance minister Jim Flaherty said Friday.
Flaherty said that legislative amendments, which will be proposed as soon as possible, would allow the grandfathering of existing products, subject to contract terms and conditions.
However, the government aims to outlaw bank products that perform the same functions as life annuities, which are not subject to the same regulatory standards as those sold by insurance companies.
Flaherty noted that this latest move is part of its efforts to keep the businesses of banks and insurers separate. “Since taking office, this government has taken steps to clarify the separation of banking and insurance activities,” says Flaherty.
“This will ensure the business of insurance continues to be subject to the appropriate rules and regulations.”