Industry News

Greater transparency intended to promote financial literacy

By Fiona Collie |

Finance Minister Joe Oliver Wednesday announced the voluntary commitment of Canada's banks to provide customers with more information about the potential risks associated with powers of attorney (POA), joint deposit accounts and collateral charge mortgages.

"This new information will allow consumers to make more informed choices," said the minister, speaking at the Toronto headquarters of Credit Canada Debt Solutions Inc., "which means saving more of their hard earned money."

General information relating to these topics is now available on bank websites and will be available in branches by December 31.

Banks will implement staff training on how to answer questions relating to POAs and joint deposit accounts by March 31, 2015. This training and disclosure will be applicable to any employee dealing directly with clients or their attorneys, including investment advisors.

General information relating to mortgages will be available in branches at point of sale starting November 30, while specific information will be available prior to or at the time of entering into the loan agreement beginning Jan. 31, 2015.

"By taking this step towards greater transparency, Canada's financial institutions are putting consumers first, promoting financial literacy and helping build a stronger economy," said Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada (FCAC).

Under these voluntary agreements, banks need to explain clearly and simply the minimum requirements necessary for an account to operate under a POA. For example, the client or attorney may need to provide the original POA or a notarized version as well as proper identification in order for the bank to act on his or her orders.

As part of the disclosure process, banks will make available to clients an educational brochure (available from the federal government) entitled "What every older Canadian should know about: powers of attorney (for financial matters and property) and joint bank accounts" or equivalent information.

"Providing seniors with pertinent material is essential in the prevention of elder abuse," said Patricia White, executive director, Credit Counselling Canada.