Ottawa is going to beef up banking watchdog the Financial Consumer Agency of Canada (FCAC) in a bid to enhance consumer protection in the banking sector, the federal government announced in Tuesday’s federal budget — along with a handful of other legislative measures that aim to shore up the stability of the financial system.
The government pledges to introduce legislation in Budget 2018 that will strengthen the FCAC’s powers and mandate to protect consumers in their dealings with financial services sector firms. The details of the legislation will be worked out in forthcoming consultations with the provinces and other stakeholders, it notes.
The announcement represents the government’s latest pledge to ramp up consumer protection in the federally-regulated financial services sector. Previous efforts have floundered amid issues of jurisdiction, particularly possible conflicts between federal and provincial consumer protection legislation, and in the face of criticism about weak standards and oversight along with an inadequate dispute-resolution system.
Nevertheless, government declares in the budget that it takes financial consumer protection “very seriously and intends to ensure that all Canadians benefit from strong consumer protection standards.”
At the same time, the budget also promises measures designed to ensure financial system stability. To that end, Ottawa is pledging to introduce legislation that will modernize the deposit insurance system. Consultations on the subject were held back in the autumn of 2016; now, the government is preparing to move ahead with legislation.
“These changes would modernize the scope of deposit insurance coverage to better reflect products currently offered in the market, address the complexity of trust deposits, help protect depositors and improve understanding of insurance coverage, and ultimately better support financial stability,” the budget documents state.
Also, the feds are preparing to introduce legislation that would implement a framework for resolving systemically-important financial market infrastructure firms (FMIs), such as the clearing and settlement systems that make up the plumbing of the financial system, as part of ongoing efforts to enhance financial stability in the wake of the global financial crisis.
“The objectives of the FMI resolution regime are to maintain the critical services of the FMI, promote financial stability, and reduce potential public exposure to loss,” the budget documents note.
One of the government’s other major ongoing financial sector reform initiatives — the creation of a Co-operative Capital Markets Regulator (CCMR) involving both the federal government and collection of willing provinces — was not mentioned at all in the budget. That’s perhaps not surprising, given that the Supreme Court of Canada (SCC) will hold a hearing next month to consider the constitutionality of the proposed structure, which may yet determine whether this long-running federal initiative is ever realized.