Banks Must Respect Insurance Regulations: Ont. Superior Court

Banks must respect regulations governing insurance sales in Ontario, a recent Ontario Superior Court decision states.

The decision, issued November 18, finds the Royal Bank of Canada acted as an agent or broker when it sold a mortgage insurance policy to Salih and Mirsada Mujagic.

The case involved a mortgage in default, which the couple doesn’t dispute. But they alleged that the bank was negligent, misrepresenting the nature and quality of the insurance they purchased; and that it breached the law in providing and promoting insurance products.

“I am satisfied that the wording of the brochure raises factual issues of the breach of the Ontario insurance scheme by each of the applicants so as to raise triable issues for trial,” Superior Court Justice David Crane stated in his judgment. “The respondents have raised the factual issues of a special relationship in which statements and representations were made that may be found to be negligent and factual issues of whether a duty of care created by the insurance agent and customer relationship was breached by either or both of the applicants.”

In making his ruling, Justice Crane acknowledged gaps in current regulation, pointing out that Ontario “has not enacted enabling legislation specifically requiring banks promoting the specified insurance products at their branches in Ontario from obtaining a form of licence.”