British Columbia tells insurer to stop selling credit insurance with payday loans

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British Columbia regulators have sanctioned insurance company Western Life Assurance for failing to effectively supervise two payday lenders who used pressure tactics to sell credit insurance to their clients.

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In a joint announcement Wednesday, the Financial Institutions Commission (Ficom) and Consumer Protection BC issued an order prohibiting Western Life from selling insurance through payday lenders until it can show Ficom that it has established effective oversight.

And Western Life has had 10 days to contact all customers who have purchased insurance, properly inform them of the terms of the insurance, and offer to cancel policies and refund premiums.

Payday lenders, Venue Financial Ltd. and CashCo Financial Inc., have also been ordered to stop selling credit protection loans until Ficom is satisfied that Western Life has effective oversight of their tactics.

“Some may view the practices identified (in the survey) as borderline predatory,” said Chris Carter, deputy superintendent of financial institutions at Ficom.

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Carter said regulators are investigating the cases to identify damage to consumers and “in this case, we have taken action to end the practices that we have identified.” He said the investigation is still open with the possibility of further execution, including sanctions.

According to the Ficom order, investigators discovered that Venue and CashCo used high-pressure tactics to sell the cover – which should have been described in advance as an optional and voluntary purchase – to protect their debts in the event unemployment, injury or death.

Instead, according to Ficom’s order, employees of payday lenders would add insurance to loans without disclosing it and leave it to clients to object, or aggressively sell the option with scripts that included persistent rebuttals.

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“Never mention (insurance) during the transaction,” one lender’s training manual reads. “The key to increasing our (insurance) percentage is to bury it in lower (loan) costs. “

In another point, the manual, cited in the Ficom order, states that employees should: “Assuming they take their maximum and always add loan protection (sic) unless they are not eligible.” due to age restrictions. “

Between the two companies, they operated 20 offices in locations ranging from Esquimalt on Vancouver Island to Dawson Creek in the northeast.

And the evidence gathered from the survey shows that the revenue collected by selling voluntary insurance was considerable.

According to Ficom’s decision, Venue collected $ 399,215 over the year between June 1, 2015 and May 30, 2016. CashCo has been shown to have raised $ 191,031 between February 1, 2015 and January 31, 2016.

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