The Insurance Brokers Association of Canada (IBAC) claims that the country’s largest bank, RBC, is ignoring federal rules by allowing its insurance arm to solicit new business from current banking customers. The sharing of customer information with RBC Insurance became the topic of a complaint filed with the Office of the Superintendent of Financial Institutions (OSFI) late July.

The complaint was triggered when RBC Insurance sent out marketing correspondence that appears to breach the prohibition against a bank sharing its customer information with an insurance company. “As an RBC Royal Bank credit card client, you already have a relationship with RBC Royal Bank. Now you can trust RBC Insurance for your insurance needs,” the marketing material states. “And if you use your RBC Rewards credit card to pay for your insurance premiums, you can earn RBC Rewards points.”

Dan Danyluk, CEO of IBAC, notes in a July 20, 2012 letter to OSFI that the marketing correspondence “attempts to leverage the customer’s relationship with the Royal Bank in order to entice and solicit the customer to insure his cars and home with RBC Insurance.” Section 8 of the Insurance Business (Banks and Bank Holding Companies) Regulations “prohibits banks from providing or permitting their subsidiaries and affiliates to provide, directly or indirectly, an insurance company, agent or broker with any information respecting a customer of the bank in Canada,” Danyluk writes.

Often coined the “chinese walls” within a bank, the separation between banking and insurance is a fundamental concept that prevents the sharing of banking customer information with any insurer, whether it’s the bank’s own insurance business or not.

What happens with the complaint, however, may never be known.The Bank Act makes confidential any kind of discussions between OSFI and any of the banks it supervises. RBC reports it is “committed to regulatory compliance and respects the Bank Act and privacy legislation.