October 16, 2009

Canadian banks will square off with Ottawa as early as next week in a bid to minimize the damage that new rules restricting online insurance sales will have on their business.Many officials in the banking industry are still smarting from the unexpected blow that Finance Minister Jim Flaherty dealt them last week. “I don't think the memory of this is going to fade any time soon,” said a senior employee at one of the big banks.

The move introduced new tension into the relationship between Bay Street and Ottawa, sources say. Ottawa was frustrated that most banks did not quickly make changes to their websites in response to a letter the Finance Minister faxed the bank CEOs last Wednesday requesting that they do so.