Competition Bureau provides recommendations to strengthen competition in Canada’s financial sector
News release
Consumer-driven banking and mortgage-switching will increase competitive pressure
March 21, 2024 – GATINEAU (Québec), Competition Bureau
The Competition Bureau is pleased to publish its submission in response to the Department of Finance Canada’s public consultation on strengthening competition in the financial sector.
Concerns around affordability and Canada’s productivity performance have brought a renewed focus on the critical role of competition in the Canadian economy. The need to strengthen competition is especially important in the financial sector, where borrowing costs have rapidly increased to their highest levels in a generation.
This submission answers Finance’s key questions about bank mergers, market concentration, and public reporting on concentration and competition in Canada's banking sector.
It also makes two recommendations to lower switching costs for consumers and meaningfully advance competition. Notably, the Bureau:
- encourages Finance to swiftly adopt a consumer-driven banking framework that will boost competition and innovation by challenging established providers and enabling new service providers; and
- urges policymakers to reconsider the application of the stress test at mortgage renewal for uninsured borrowers, to allow them to switch lenders and benefit from competition.
The Bureau urges policymakers to prioritize and actively nurture competition in the financial sector and welcomes the federal government’s commitment to deliver consumer-driven banking to Canadians by 2025.
Quotes
“This consultation provided an ideal opportunity to recognize the importance of competition in the financial sector. We urge policymakers to prioritize and foster pro-competitive measures to help tackle ongoing concerns around affordability and productivity in the Canadian economy.”
Matthew Boswell,
Commissioner of Competition
Quick facts
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On December 21, 2023, Finance launched a consultation on potential measures to strengthen competition in Canada’s stable and secure financial sector. The consultation closed on March 1, 2024.
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Consumer-driven banking, also known as open banking or consumer-directed banking, refers to systems that allow people and businesses to securely transfer their financial data to different financial services providers, such as apps that use data to provide automated budgeting and savings advice.
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In the 2023 Fall Economic Statement, the federal government announced it will introduce legislation through Budget 2024 to establish a consumer-driven banking framework that would regulate access to financial data.
Related products
Associated links
- 2023 Fall Economic Statement
- 2023 Fall Economic Statement: Policy Statement on Consumer-Driven Banking
- Report to the Minister of Finance Regarding the Proposed Acquisition of HSBC Bank Canada by Royal Bank of Canada
- Comments to the Advisory Committee on Open Banking (2021)
- Submission to OECD: Digital Disruptions in Financial Markets (2019)
- Submission to Finance Canada: Open banking (2019)
- Market Study Final Report: Technology-led Innovation in the Financial Services Sector
- Submission to OECD: Financial technology (2017)
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The Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. Competition drives lower prices and innovation while fueling economic growth.
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