LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
'Tied selling' or coercive tied selling is:
- APermitted, since a lender is entitled to protect its security by requiring insurance from the borrower
- BOnly a federal issue, since the prohibition appears in the Bank Act and not in provincial insurance law
- CRequired by banks under their prudential rules, so a lender must insist on its own insurance product
- Prohibited, since requiring a purchase as a condition of another product is an unfair practice
Correct answer: D) Prohibited, since requiring a purchase as a condition of another product is an unfair practice
Coercive tied selling is prohibited under federal bank rules and provincial UDAP provisions. Clients can choose their insurer.
Why the other options are wrong
- ACoercive tied selling is prohibited, not permitted.
- BProvincial rules also apply.
- CBanks may not require it.
Exam tip
No coercive tying; voluntary bundling is different.
Common mistake
Implying a loan depends on buying the lender's insurance.
What this tests
CISRO competency component 1.1 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.