Protections take effect June 30 as part of Canada's new Financial Consumer Protection Framework
OTTAWA, ON , June 30, 2022 /CNW/ - Starting June 30, Canadians will benefit from new and enhanced protections in their dealings with banks. The protections fulfil commitments made by the federal government in 2018 to introduce a new Financial Consumer Protection Framework (Framework) in the Bank Act.
Starting June 30, Canadians will benefit from new and enhanced protections in their dealings with banks.
The Framework holds banks to a higher standard and requires them to take greater responsibility for consumer outcomes. For example, they must strengthen their complaint-handling procedures and provide more information to their customers so they can make informed and timely decisions. The Framework also requires banks to meet higher standards in their sales practices, including providing products and services to their customers that are appropriate based on their financial needs and circumstances.
Among the new and enhanced protections that take effect on June 30, banks must:
Deal with customer complaints within 56 days. This is the first time that banks will be required by law to deal with complaints within a specific period.
Ensure that the way they pay their employees does not interfere with the new obligation to offer and sell products and services that are appropriate for their customers.
Send electronic alerts to their customers to help them avoid going into overdraft or spending over their credit limit, which can result in fees.
Provide advance notice so customers can decide if they want to renew or cancel their products or services.
Provide separate agreements for each product and service so customers understand what they are buying, how much it will cost, and how to cancel an agreement.
Comply with broader protections against providing misleading information or using coercive sales practices.
In addition, banks will have to create a whistleblowing program for their employees to encourage them to come forward if they notice problems. Bank employees are often the first to know about issues and can help expose problems that could otherwise go unreported. Bank employees will also be able to report wrongdoings to the Financial Consumer Agency of Canada (FCAC) or the Office of the Superintendent of Financial Institutions (OSFI).
FCAC is the federal regulator responsible for supervising and enforcing the compliance of banks with their market conduct obligations, including the new and enhanced protections in the Framework. Banks, authorized foreign banks, and federal credit unions must comply with the Framework. The new Framework is based on extensive consultations and addresses issues raised by FCAC in its past reviews of the banking industry.
Canadians can learn more about the new and enhanced protections in the Framework by visiting: www.canada.ca/FCAC
"The financial well-being of Canadians is hugely important and we're taking more action to protect people in their dealings with banks. Canada's new Financial Consumer Protection Framework includes more than 60 new or enhanced protections and it will help Canadians manage their money with more confidence and peace of mind."
The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance
"The Financial Consumer Agency of Canada is there to protect consumers of financial products and services, but this is also a responsibility shared by the financial industry. Canada's new Financial Consumer Protection Framework is an important milestone for consumer protection in Canada in that it places a greater responsibility on banks to focus on the financial outcomes of their customers. In today's increasingly complex and rapidly changing financial world, the Framework will further protect and empower Canadians."
Judith Robertson, Commissioner of the Financial Consumer Agency of Canada
The role of the Financial Consumer Agency of Canada (FCAC) is to protect financial consumers by strengthening the financial literacy of Canadians and supervising the compliance of federally regulated entities, including banks, with their legal obligations, codes of conduct and public commitments.
In 2018, the Government of Canada adopted legislation to introduce a new Financial Consumer Protection Framework (Framework) in the Bank Act to further empower and protect financial consumers in their dealings with their banks.
The legislation that created the Framework also provides FCAC with more powers to better protect Canadians in their dealings with banks. This includes mandatory naming of banks that commit violations, the power to impose higher penalties on banks that commit violations of their legal obligations, and the power to direct banks to take actions to comply with their legal obligations. FCAC's new powers came into force in April 2020.
Budget 2022 announced the government's intention to introduce targeted legislative measures to strengthen the external complaints handling system and to put in place a single, non-profit, external complaints body to address consumer complaints involving banks. Legislative amendments will be forthcoming as part of the Budget Implementation Act No. 2.
SOURCE Financial Consumer Agency of Canada
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