Financial Crime World

Financial Regulation Updates in Canada: New Protections Take Effect June 30

Canada’s federal government has introduced a new Financial Consumer Protection Framework (Framework) as part of the Bank Act, providing enhanced protections for Canadians when dealing with banks. The reforms, which come into effect on June 30, aim to hold banks to a higher standard and were announced by the government in 2018.

Key Changes

  • Banks must strengthen their complaint-handling procedures to deal with customer complaints within 56 days.
  • Banks must provide more information to customers, including advance notice before renewing or cancelling products and services.
  • Separate agreements will be required for each product and service offered by banks.
  • Banks must comply with broader protections against misleading information and coercive sales practices.

New Regulations

  • Complaint-Handling Procedures: Banks must deal with customer complaints within 56 days, ensuring that issues are resolved promptly and fairly.
  • Sales Practices: Banks will be required to meet higher standards in their sales practices, ensuring that employees are incentivized to provide appropriate products and services to customers.
  • Electronic Alerts: Banks will send electronic alerts to customers to help them avoid overdraft fees.

Additional Protections

  • Whistleblowing Program: Banks must create a program for employees to report any issues they may have noticed, ensuring that concerns are addressed promptly.
  • Misleading Information and Coercive Sales Practices: Banks will be prohibited from engaging in misleading or coercive sales practices, providing customers with a safer and more transparent experience.

FCAC Oversight

The Financial Consumer Agency of Canada (FCAC) will oversee the compliance of banks with these new regulations, which are based on extensive consultations and address issues raised by FCAC in its past reviews of the banking industry.

Quote from Deputy Prime Minister and Minister of Finance Chrystia Freeland

“The financial well-being of Canadians is hugely important and we’re taking more action to protect people in their dealings with banks.”

Quote from FCAC Commissioner Judith Robertson

“This is an important milestone for consumer protection in Canada, as it places a greater responsibility on banks to focus on the financial outcomes of their customers.”

Conclusion

The new regulations are expected to further protect and empower Canadians in their dealings with banks. The Financial Consumer Protection Framework aims to hold banks to a higher standard, providing Canadians with enhanced protections and promoting a more transparent and fair banking industry.