Insurers complain to Ottawa about BMO productBy Alain Thériault | October 02 2011 03:52PM
This summer, a group of large insurers asked the Office of the Superintendent of Financial Institutions (OSFI) to consider the Bank of Montreal’s (BMO) Lifetime Cash Flow product .The insurers believe that the bank has no right to manufacture this kind of product because it is similar to an insurance product. The Superintendent has yet to respond to their complaint.
OSFI spokesperson Léonie Roux told The Insurance and Investment Journal that the Superintendent had received a letter from the group of insurers and that she was reviewing the matter. “The response from Julie Dickson is being developed,” said Ms. Roux. A few months earlier, Ms. Dickson told The Globe and Mail that she would be in a position to make a response in the fall.
BMO promises an annual payment for life, which is equal to 6% of the amount that was initially deposited into the product 10 years prior. Payments therefore begin on the 11th anniversary of the year the client made the deposit. The bank guarantees its promise with the help of a deposit note linked to the performance of four underlying BMO funds. The product is only available to those aged 50 and older and requires a minimum deposit of $5,000. (AT)