Which of the following scenarios best illustrates the prohibited practice of 'tied selling'?

Question: Which of the following scenarios best illustrates the prohibited practice of 'tied selling'?

Answer options:

• Offering a lower interest rate if the client chooses to move their investments to the bank.
• Requiring a borrower to provide a house as collateral for a mortgage.
• Suggesting that the client should review their life insurance needs during a mortgage application. ✅ Telling a client that their mortgage application will only be approved if they purchase the bank's life insurance product.

Correct answer: Telling a client that their mortgage application will only be approved if they purchase the bank's life insurance product.

Explanation: Tied selling involves requiring a client to purchase one product as a condition for being approved for another (e.g., a loan). Offering a discount (bundling) or requiring collateral for a loan is generally permitted, but forcing the purchase of insurance to get a loan approval is a prohibited practice under the Bank Act and provincial insurance regulations.