Canadian Finance Minister Jim Flaherty intends to propose legislation that bans banks from selling products that are similar to annuities.
Canadian law already prevents banks from selling annuity products.
Canadian finance officials are apparently concerned that the lines between annuity and banking products are increasingly blurred.
Bank products that are represented as lifetime cash flow vehicles presumably fall under this area of concern.
This hybrid or blurred product category more than likely contains similarities to the structured product market in the United States.
Also of concern is the growth of Internet-based product marketing by banks and other financial institutions.
The proposed legislation appears to be very pro-consumer. Canadian Ministry of Finance officials seem to want clear lines of distinction between annuity products and bank products as the two areas are governed by very different sets of regulations.
The regulatory differences are meaningful for consumers as any confusion regarding companies providing the promise of lifetime income is not in the best interest of consumers.
Source: Canadian Business
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