Consultation on Strengthening Competition in the Financial Sector

Current Status: Open

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The Department of Finance is launching a consultation on potential measures that the federal government could take to strengthen competition in Canada’s stable and secure financial sector, including working with provincial governments. To protect Canadian consumers, this consultation focuses on ensuring consumers’ access to a broad range of affordable, innovative, and consumer-focused services that meet their banking needs.

This consultation builds on the Department of Finance’s previous consultation on the federally-regulated financial institutions statutes, as part of the financial sector legislative review announced in Budget 2022.

Views and feedback from these consultations will be considered in the development of policy, legislative, and regulatory proposals that promote competition within Canada's stable and secure sector.

Background

The acquisition or merger of banks is subject to the approval of the Minister of Finance under the Bank Act. The Act provides that in making her decision, the Minister of Finance can take into consideration all matters that she considers relevant, including the best interest of the financial system in Canada. Any acquisition or merger decision taken by the Minister of Finance is informed by a prudential and regulatory compliance assessment from the Office of the Superintendent of Financial Institutions (OSFI) and by the findings of any applicable review made by the Competition Bureau under the Competition Act.

The Department of Finance is seeking views on how the current acquisition or merger process could be enhanced to support greater competition, including potential additional factors which could be considered by the Minister of Finance when making such a decision, and potential additional measures to address market concentration, as well as barriers to entry or expansion.

Key Questions for Consideration

  1. What existing barriers do Canadian consumers face in accessing banking services? How could these barriers best be addressed within the scope of the acquisitions and mergers framework?
  2. What changes, if any, are required or desirable to the merger and acquisition review process for banks?
    • What new considerations should be included in a review of a merger or acquisition under the Bank Act?
    • What are the range of appropriate remedies that should be considered to address any competition or concentration concerns?
    • How can federal agencies and authorities better cooperate and share information during reviews of Canadian bank mergers and acquisitions?
  3. Should the government formalize a ban on mergers between large banks, and if so, how?
    • What would be an ideal threshold size for such a ban?
  4. Should the government consider measures that would limit how large banks can grow through acquisitions, and if so, how?
    • Should there be limits to acquisitions of financial institutions by domestic systemically important banks or global systemically important banks?
    • Should there be limits to banks' ability to acquire other financial institutions if their combined market share of a certain product exceeds a set threshold? If so, how should those thresholds be set and implemented? What should the remedies be?
  5. What measures would support a stronger tier of smaller, disruptive competitors (e.g., small- and medium-sized banks, credit unions, and fintechs)?
    • What are the respective roles of the federal government, provinces, and territories? How could different orders of government work together more effectively to support smaller, disruptive companies?
    • How can the federal government’s commitment to deliver Consumer-Driven Banking, also known as open banking, support competition in the financial sector?
    • How could Real-Time Rail support competition in the financial sector?
  6. Could the framework better ensure a more level playing field for all participants to support competition?
    • Should large banks be required or incentivized to offer third-party products and services?
  7. Should there be a regular public report on concentration and competition in Canada's banking sector? What would be important areas to consider in such a report?
  8. What other measures, if any, should the government take to address factors that affect competition such as market concentration, barriers to entry and expansion, regulatory burdens, switching costs, and the conditions facilitating coordinated behaviour in the banking sector?
    • What is the role of provinces in supporting more competition in the financial sector and are there issues that should be addressed with better coordination and collaboration?
  9. What measures to encourage competition could also support the creation of new jobs, and the protection of existing jobs, in the Canadian financial sector?
    • What could be the potential implications for the Canadian financial sector workforce from your suggestions to the above questions?

We also invite you to submit any additional comments or feedback relevant to the scope of this consultation.

Contact Us

Submissions for this consultation will be open until March 1, 2024.

Email us your comments and feedback at legreview-examenleg@fin.gc.ca with "Consultation on Concentration in the Banking Sector" in the subject line.

Comments and feedback may also be sent by mail to:

Manuel Dussault
Director General
Financial Institutions Division
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa ON K1A 0G5

Who is the focus of this consultation?

Through this consultation, we want to hear from all Canadians, including consumer advocates, academics, and civil society groups.

Privacy

Those providing comments are asked to clearly indicate the name of the individual or the organization that should be identified as having made the submission. In order to respect privacy and confidentiality, please advise when providing your comments whether you:

  • consent to the disclosure of your comments in whole or in part;
  • request that your identity and any personal identifiers be removed prior to publication; or
  • wish that any portions of your comments be kept confidential (if so, clearly identify the confidential portions).

Information received through this comment process is subject to the Access to Information Act and the Privacy Act. Should you indicate that your comments, or any portions thereof, be considered confidential, the Department of Finance will make all reasonable efforts to protect this information.

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