Canada's largest bank is facing allegations it has contravened federal banking rules in allowing its insurance arm to solicit new business from customers of its retail bank division.

In a letter to Canada's top banking regulator, the Office of the Superintendent of Financial Institutions or OSFI, Dan Danyluk of the Insurance Broker's Association of Canada says one of the bank's Alberta members was recently contacted by RBC, where he is a banking client, and sent marketing material encouraging him to sign up to become a client in RBC's home and auto insurance arm.

According to a clause in Canada's Bank Act (which regulates a bank's right to exist and do business in Canada) banks are expressly forbidden from "providing or permitting their subsidiaries or affiliates to provide, directly or indirectly, an insurance company, agent or broker with any information respecting a customer of the bank in Canada."

Danyluk produced a copy of the marketing material, in which the addressee is told "As an RBC Royal Bank credit card client, you already have a relationship with RBC Royal Bank. Now you can trust RBC Insurance for your insurance needs."

The material goes on to list the benefits of RBC's insurance offerings, including the alleged savings that could be had, and the customer is encouraged to call RBC's insurance arm to sign up as a customer.

"Given the content of the marketing letter, it would appear that RBC Royal Bank has either directly or indirectly shared the following customer information with RBC Insurance, in violation of the [law]," Danyluk said.

When asked for comment, Royal Bank told CBC News "we are committed to regulatory compliance and respect the Bank Act and privacy legislation.‬"

Finance Minister Jim Flaherty has repeatedly warned banks to make sure the separations between their banking and insurance arms are impenetrable. But the industry has been dogged by complaints that a customer of one part of a bank's business is frequently solicited by other divisions.

"The marketing letter from RBC Insurance is a development raising serious concerns, especially since it is unlikely to have been an isolated incident," Danyluk said.