Interior view of the Canada Commons of Parliament

The federal consumer protection regime covering the financial sector lacks enforcement power, says a new report published from the Financial Consumer Agency of Canada (FCAC).

Published on Monday, the Report on Best Practices in Consumer Protection sets out the results of a review of consumer protection in the financial sector, which covers both Canada’s federal and provincial regimes, along with a review of international best practices.

The review, which comes as part of an effort to enhance the federal consumer protection regime, finds that although the federal system is strong overall, there is room for improvement in enforcement and options for consumer redress.

For example, compared with federal authorities, some provincial-territorial regulators, “have access to a broader range of enforcement tools, including compliance and court orders,” the report states/

In some provinces, regulators can order businesses to comply with the legislation, and in British Columbia and Alberta, the regulator can bring legal proceedings on behalf of consumers to obtain redress, the report notes. “FCAC does not have the authority to order compliance or redress, and therefore resorts to moral suasion and regulated entities’ cooperation to ensure they correct their breach and remediate consumers,” it states.

Indeed, the FCAC “does not have the authority to compel compliance,” the report stresses. Instead, it essentially relies on a “name and shame” system to encourage compliance.

“In the past, FCAC has resorted to moral suasion in an effort to convince financial institutions to affect redress. While moral suasion has allowed FCAC to obtain results, as financial sector legislation moves towards a principles-based approach, there is no guarantee that FCAC will achieve the same level of success in the future,” the report states.

Moreover, the report notes that provincial laws provide consumers with statutory rights to resolve disputes through the court system; whereas federal financial institution statutes do not provide consumers with a statutory right of action. States the report: “Consumers can use the third party dispute system to seek redress on an individual basis, but the recommendations of third party complaint bodies do not extend to classes of consumers.”

Additionally, provincial schemes provide consumers, “with access to redress mechanisms and remedies that are unavailable under the federal scheme,” the report states, pointing out that consumers do not have access to mediation and other services under the federal framework.

“Some of these elements could be introduced in the federal scheme to further enhance the financial consumer protection framework,” the report states.

The report outlines 11 best practices that the FCAC uncovered in its review of consumer protection regimes.

“The report’s findings will help inform the government’s work on a new financial consumer protection framework,” the FCAC says in a news release