January 1, 2016, regulatory amendments under the Credit Unions and Caisses Populaires Act, 1994, regarding promotion of insurance products on credit union and caisse populaire websites

Questions and Answers

 
Q: What changes have been made to the General Regulation under the Credit Unions and Caisses Populaires Act, 1994 (CUCPA)?
 
A: The General Regulation has been amended to prohibit credit unions and caisses populaires from promoting insurance products not related to the core business of the credit union, such as home and auto insurance, on their websites. The amended regulation will also define a credit union website.”
 
Q: When will the amendments to the General Regulation under the Credit Unions and Caisses Populaires Act, 1994 (CUCPA) come into effect?
 
A: The amendments will come into effect on January 1, 2016.
 
Q: Why were amendments to the General Regulation under the Credit Unions and Caisses Populaires Act, 1994 (CUCPA) introduced?
 
A: Currently, credit unions and caisses populaires are prohibited under the CUCPA from selling and promoting insurance in their branches unless the insurance is of an authorized type such as creditor, mortgage, or travel insurance. There was confusion in the industry on whether the prohibition included promoting insurance products online.
 
To address this gap and provide clarity to stakeholders, the government introduced amendments to the General Regulation extending the existing prohibitions to include the websites of credit unions and caisses populaires.
 
The change will ensure greater consistency between the promotion of insurance products permitted online and the promotion permitted in branches.
 
Q: What do credit unions and caisses populaires need to do in order to comply with the new regulations?
 
A: Some credit unions and caisses populaires may need to modify their web pages if they are currently promoting unauthorized insurance products.
 
Q: How much time will credit unions have to adjust their websites to be in compliance?
 
A: Credit unions should begin the process of reviewing their websites and making the necessary adjustments as soon as possible. Credit unions must be in compliance when the changes come into effect on January 1, 2016.
 
Q: Was the industry consulted on these changes?
 
A: Yes. Following an announcement in its 2014 Budget, the Ontario government held a public consultation with key stakeholders. In addition, in January 2015 the government posted on its Regulatory Registry the proposed amendments to the General Regulation with an opportunity for stakeholder comment.
 
Q: Credit unions and caisses populaires are member-based organizations that act in the best interest of their members. Why are they prohibited from selling and promoting insurance products to their members?
 
A: The restrictions are intended to separate the business of selling insurance from banking in order to enhance consumer protection and deter sub-standard practices such as tied selling, unfair influence at point of sale,  and conflicts of interest in regards to networking arrangements that may confuse consumers.
 
Q: Why is Ontario harmonizing with the federal regime and not with Quebec and British Columbia where not only promotion but also the sale of insurance in branch and online is allowed?
 
A: It is the Ontario government’s position that credit unions should operate under a consumer protection framework consistent with that of federally regulated financial institutions.
 
Q: Why was this amendment introduced ahead of the Five Year CUCPA Review?
 
The government has been reviewing this matter since 2012. There was confusion on whether or not the regulation that prohibits credit unions from promoting insurance at any office of the credit union also covers website promotion. Promotion on the credit union’s public website can be viewed as allowing credit unions to do indirectly what they cannot do directly. The government decided to address immediately this gap and provide clarity to stakeholders on the intent of the provisions.