Considering Canadian Western Bank
With all the commentary The Court has been compiling on the SCC’s work, I thought it might be interesting to spend some time speculating on one of the upcoming decisions yet to be handed down.
In Canadian Western Bank v Alberta, 2007 SCC 22 [Canadian Western Bank], we have an interesting clash. Here we have the appellant banks trying to get around Alberta’s Insurance Act, RSA 2000, c I-3 [the Act], and its associated regulations, basing their arguments on interjurisdictional immunity or the doctrine of paramountcy. The argument is that Federally-regulated banks that promote insurance should be covered by the Insurance Business (Banks and Bank Holding Companies) Regulations, SOR/92-330, and not be subject to the Act.
The banks have sought a declaration to this effect but have been dismissed by both the trial and appeal level courts. Can Neil Finkelstein, Jeff Galway, and Catherine Beagan Flood, counsel for the Banks, convince the Supremes of their case? Or can Robert Normey, Christine Enns, and Nick Parker defend Alberta’s jurisdiction?
Even with my cudgel-like legal skills, this case seems to dredge up memories of Bank of Montreal v Hall,  1 SCR 121, in which the SCC considered paramountcy in the context of notification requirements of provincial legislation which were placed on banks seizing assets that had provided security for a loan. La Forest J. focused specific attention on the history of the legal conception of the business of banking and in this particular case the provision of loans and taking security was seen as a core practice. This core practice being the primary factor in deciding the case.
But what about Canadian Western Bank? What about insurance? With the recent debates about the revision of the Bank Act, SC 1991, c 46, to allow for banks to sell insurance out of their branch offices, it seems this area may be shifting more and more into the purview of banks. If this is the case is it time for the SCC to recognize this?
Surely, Finkelstein and company are more persuasive than I. However, the very fact that the debate on removing the ban on banks’ selling insurance through their branches is so fresh points to this not being a core function of the business of banking. The use of either interjurisdictional immunity or paramountcy to allow banks to free themselves of the regulatory regime provided in the Act would not render the legislation inapplicable to provincial insurance brokers.
This then gives rise to the need to ask some questions as to the utility of creating a market for insurance which is serviced by different classes of actors both subject to their own distinct regulatory regimes. What market effects might such a scenario have and given the room the court has to maneuver on this issue is it desirable?
While banks want to aggressively market their insurance and lower their costs of regulatory compliance, it remains to be proven that any efficiency gains to the banks will outweigh the negative impacts on the insurance market as a whole. Unless I have missed some large chunk of the argument I can’t really see how the SCC could decide to grant the declaration sought by the banks. Contradictory prediction, anyone?