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It is at least remotely possible that the liability insurance contract they have requires that open water students dive in gear the dive shop owns or has sold (although I doubt it). They should have informed you of this when you were looking at gear there. But I suspect this is far more a shop "policy", not required by anybody except the shop owner, who looks to maximize the profit from each student. (Classes are loss leaders for dive shops; where they make money on OW students is by selling them equipment, so if you buy your equipment elsewhere, the shop has lost money on training you.) It is an all too common and quite detestable behavior on the part of shops.
While I agree that OW training is probably a loss leader for a dive shop, I doubt if many shops ever lose any money on training. Remember, "loss leader" does not mean it is actually sold at a loss (although it could be). It means that it is sold with a reduced profit margin with the idea that it will draw customers into other purchases at with full profit margins. The training agency gets paid. The instructors get paid. The shop does not lose money.