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The Honourable Jim Flaherty, Minister of Finance, today announced the Harper Government will introduce legislation to prevent banks from offering financial products that function like life annuities.
“Since taking office, this Government has taken steps to clarify the separation of banking and insurance activities,” said Minister Flaherty. “This will ensure the business of insurance continues to be subject to the appropriate rules and regulations.”
Life annuities are financial contracts that make a series of payments to buyers over their lifespan. To ensure the market for life annuities continues to function safely and efficiently, and to ensure consumers are properly protected, these products are subject to the regulatory framework for insurance companies. As well, current federal legislation prohibits banks from promoting or selling life annuities, which are considered insurance products.
However, in recent years, some banks have introduced products that perform the same or similar functions as life annuities. These products are not subject to the same regulatory standards as those sold by insurance companies.
The Minister said legislative amendments, which will be proposed as soon as possible, would allow the grandfathering of existing products, subject to contract terms and conditions.
For further information, media may contact:
Mary Ann Dewey-Plante
Office of the Minister of Finance
Department of Finance
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