Appearance before the Standing Committee on Finance (July 7, 2020): Financial Consumer Protection Framework
Issue
In December 2018, the government approved legislative amendments as part of a strengthened Financial Consumer Protection Framework (FCPF) to better protect financial consumers. These legislative amendments create obligations on banks, and will strengthen FCAC’s ability to protect financial consumers through new powers and tools to better enable the Agency to meet its mandate.
Background
Some of the new FCPF authorities came into force on April 30, 2020 and the rest of the FCPF will come into force at a later date (as will be decided by the Minister of Finance and the Treasury Board). The amendments that came into force are powers and authorities for the FCAC’s Commissioner. The other elements that will come into force at a later date are obligations on the banks that require time for both industry and the FCAC to prepare for implementation.
Data/Quick facts
- FCAC’s mandate was consolidated as federal responsibility for financial literacy was transferred from the leader to the Agency as a whole.
- The provisions that have come into force are:
- mandatory naming of the entity that has committed a violation, and higher penalties that may go up to $10,000,000 per violation
- the Commissioner’s power to direct a bank to comply with a compliance agreement or a consumer provision
- the Commissioner’s power to direct that a bank be subjected to a special audit by a third party
- Examples of bank obligations that will come into force at a later date, include requirement to have:
- enhanced complaints handling procedures and complaints reporting obligations
- a whistleblower program and protections
- procedures that ensure customers receive appropriate products
- enhanced corporate governance for banks
Key messages
- The legislative changes consolidated FCAC’s mandate to protect Canadian financial consumers and strengthen their financial literacy.
- The legislative amendments that recently came into force are the first part of a strengthened Financial Consumer Protection Framework. Other amendments will come into force at a later date.
- The FCAC welcomes the legislative amendments that strengthen its ability to protect financial consumers that have recently come into force.
- These include the new powers to FCAC’s Commissioner, such as the power to direct a bank to follow a compliance order, or to undertake a special audit by a third party, as well as the mandatory naming of the entity that has committed a violation, and the higher penalties that may go up to $10,000,000 per violation.
- FCAC’s new powers and tools better enable the Agency to fulfill its mandate and align the Agency with other regulators in Canada and abroad.
- The Agency will update its Supervision Framework to reflect the amendments that came into force on April 30, 2020.
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