Consultation on a proposed Guideline on Appropriate Products and Services for Banks and Authorized Foreign Banks

Current status: Open

This consultation is open. All submissions must be received by January 6, 2022.

The Financial Consumer Agency of Canada (FCAC) invites comments on a proposed Guideline on Appropriate Products and Services for Banks and Authorized Foreign Banks (Guideline) in support of the implementation of the new Financial Consumer Protection Framework (FCPF) in the Bank Act. The FCPF introduces new or enhanced consumer protection measures that will further empower and protect consumers in their dealings with banks and authorized foreign banks (Banks).

The Guideline sets out clear principles and expectations that Banks should use when establishing and implementing their policies and procedures to ensure they offer or sell products and services that are appropriate for their consumers, having regard to their circumstances, including their financial needs.

The consultation will give all interested parties an opportunity to express their views and enable FCAC to benefit from a wide range of perspectives.

This is the second in a series of consultations on guidelines that FCAC has developed to help Banks comply with their obligations in the Bank Act and the new Financial Consumer Protection Framework Regulations, which will come into force on June 30, 2022.

A consultation on a proposed Guideline on Complaint Handling Procedures is in progress until December 11, 2021. Another consultation on the obligations of Banks to implement a whistleblowing program for their employees is being planned.

How to participate

FCAC invites all interested parties to submit their comments by email to FCAC.Consultation.ACFC@fcac-acfc.gc.ca or by using the following form.

FCAC will also accept written comments by mail or fax at:

Financial Consumer Agency of Canada
Supervision and Enforcement Branch
427 Laurier Avenue West, 6th floor
Ottawa, ON K1R 1B9
Fax: 613-941-1436

FCAC may wish to quote from or summarize your submission in its public documents and post all or part of it on its web pages on Canada.ca. We may revise submissions to remove sensitive information. If you would prefer that FCAC withhold all or part of your comments from its public documents, please indicate this clearly in your submission.

All comments received by FCAC will be subject to the Access to Information Act and the Privacy Act and may be disclosed in accordance with the law.

Who is this consultation for

The consultation is primarily intended for the financial industry and stakeholders with an interest in consumer protection. Interested members of the public are also invited to participate.

Background

In 2017 and 2018, 2 FCAC reports highlighted key areas where the legislation and regulations could better protect financial consumers and further strengthen regulatory oversight. The first was an assessment of best practices in provincial, territorial and international consumer protection regimes in the Report on Best Practices in Financial Consumer Protection . The second was a review of bank sales practices in the Domestic Bank Retail Sales Practices Review.

To address issues raised in these reports, the federal government introduced legislative amendments in 2018 to the Bank Act to create what is referred to as the FCPF. The FCPF includes new provisions requiring Banks to establish and implement policies and procedures to ensure that the products or services they offer or sell are appropriate for consumers. The recently published Financial Consumer Protection Framework Regulations add detail and specificity to certain legislative obligations.

Proposed Guideline

FCAC is seeking comments and feedback on the following document:

Proposed Guideline on Appropriate Products and Services for Banks and Authorized Foreign Banks

The proposed Guideline sets out FCAC’s expectations with respect to Banks’ implementation of, and compliance with, the appropriate product or service provisions in the Bank Act and the Financial Consumer Protection Framework Regulations, which will come into force June 30, 2022.

The new legislative obligations require Banks to establish and implement policies and procedures to ensure that the products or services in Canada that it offers or sells to a natural person, other than for business purposes, are appropriate for the person having regard to their circumstances, including their financial needs. In addition, Banks need to ensure that the remuneration they offer to their officers, employees or third parties, does not interfere with their ability to comply with the policies and procedures on appropriate products or services.

FCAC expects Banks will consider the following elements when establishing and implementing their policies and procedures on appropriate products or services:

FCAC expects Banks to review and revise their policies and procedures to ensure compliance with the applicable consumer provisions under the Bank Act and applicable regulations. In addition, Banks should be guided by the principles and expectations detailed in the Guideline when establishing their appropriate product or service policies and procedures.

Next steps

FCAC will consider all comments received and may modify the proposed Guideline, where appropriate. FCAC plans to publish an anonymized summary of comments on Canada.ca once the final version of the Guideline is released.

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