Bank of Nova Scotia has lost its case against the Superintendent of Financial Institutions for British Columbia over its attempts to enter the insurance business in the province.

A B.C. Supreme Court decision ruled against the bank on the issue of whether its use of Optima Communications Inc., a telemarketing firm, to enrol credit cardholders in a group insurance plan called Scotia VISA Balance Insurance amounts to doing insurance business, under the Financial Institutions Act.

The bank and Optima argued that their telemarketing activities are part of banking over which Parliament has exclusive legislative authority.

They also argue that if their activities are subject to provincial regulation, they are entitled to a licensing exemption because the activities relate to credit insurance that is incidental to the business of the bank. The Canadian Bankers Association supports their position.

The Superintendent of Financial Institutions for B.C. says the telemarketing activities are part of the business of insurance within provincial legislative jurisdiction. It was supported by the Insurance Council of British Columbia and the Canadian Life and Health Insurance Association, both of which appeared as intervenors.

The court found, “While only banks do banking, all that is done by banks is not necessarily banking. Parliament has empowered BNS to do certain things in relation to insurance. That does not make the telemarketing of insurance part of the business of banking. The telemarketing of Scotia VISA Balance Insurance is part of the business of insurance that is subject to provincial legislation. The insurance coverage is not required as a term of the credit card contract. Optima markets insurance coverage independently from issuing credit cards. The insurance is not incidental to the BNS banking business.”