Initiative aimed at aiding customers in making informed decisions
The Financial Consumer Agency of Canada (FCAC) has revealed new and enhanced protection for bank customers as part of its Financial Consumer Protection Framework, effective last June 30.
In 2018, the Government of Canada adopted a legislation to modernize the Financial Consumer Protection Framework in the Bank Act, which seeks to address issues raised by FCAC in its review of banks and is based on extensive consultations with stakeholders across Canada.
Under the new framework, banks are held to a higher standard in their sales practices, complaint-handling procedures and provision of information so customers can make informed decisions. These include:
- Dealing with customer complaints within 56 days. This is the first time banks will be required by law to deal with complaints within a specific period.
- Ensuring 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.
- Sending electronic alerts to their customers to help them avoid going into overdraft or spending over their credit limit, which can result in fees.
- Providing advance notice so customers can decide if they want to renew or cancel their products or services.
- Providing 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.
- Complying with broader protections against providing misleading information or using coercive sales practices.
The FCAC has the power to direct banks to comply with their legal obligations and, if violated, impose a penalty of up to $10 million on banks per breach.
In addition to the enhanced protections, banks are asked to create a whistleblowing program in order to expose problems that would otherwise go unreported. Employees can also report offences directly to the FCAC or the Office of the Superintendent of Financial Institutions.
