Customers of Canada’s big banks are being promised more support from the government, with the promise of a new legislative framework for consumer protection in the latest federal budget.
The 2015 budget pledges to introduce a new consumer protection framework for banks that will be enshrined in the Bank Act. According to the budget, the new framework fulfills a government promise to adopt a comprehensive code to protect financial consumers. It follows public consultations that have taken place in this area over the past couple of years.
The new regime, which will be enforced by the Financial Consumer Agency of Canada (FCAC), will consolidate the existing consumer protection provisions in the legislation, update these provisions, and make them more consistent and transparent.
Among other things, the government promises that the new framework will enhance disclosure requirements; expand prohibitions on high-pressure sales tactics; require cooling-off periods for a broader range of products; and bolster transparency and accountability through both enhanced public reporting on complaints and boosting directors’ duties when it comes to consumer protection. The government also intends to improve access to basic banking services by letting consumers use a greater variety of types of personal identification to open an account.
By consolidating various federal consumer protection measures within the Bank Act, the government says that banks will be able to “efficiently deliver national products and services,” and consumers will have common protections whenever they deal with a bank in Canada.
Additionally, the budget indicates that the banks will be required to report publicly on their adherence to a set of principles that will be enshrined in the legislation. Banks will be required to report annually “on how their business activities meet the spirit of these principles,” the budget notes.
Along with the new consumer protection framework, the budget also reiterates the government’s pledge to unveil a new national strategy for enhancing financial literacy in the coming months; and, it says that it will call on all mortgage lenders to provide consumers with more information on mortgage prepayment penalties.