Communication, Collaboration and Consultation—Requirements for a strong consumer protection framework

Delivered by Lucie Tedesco, Commissioner of the Financial Consumer Agency of Canada

Annual Consumer Session, Ottawa

March 30, 2017

Good afternoon, everyone.

I am delighted to be here with you again this year, and am thankful to our hosts, the Office of Consumer Affairs and the CRTC.

If the enthusiasm and discussions I enjoyed last year are any indication of the dedication you invest in your work, I can say with confidence that the interests of Canadian consumers are in good hands.

I have exciting news about a new initiative that will create opportunities for us to work together to build on our shared priorities. To create some suspense and to provide you the context for this initiative, though, I will first update you on some of FCAC’s key activities.

Much like the organizations you represent, FCAC is focused on consumer protection. The financial marketplace is constantly evolving, and we have to stay in step with that evolution—and evolve ourselves. We are only as effective as we are prepared for emerging challenges and opportunities.

You know as well as I do that strategies to ensure consumer wellbeing cannot be developed in a vacuum. Financial consumers. Regulatory counterparts from across the country and across the world. Consumer advocacy organizations. These are just a few of the groups comprising the Agency’s vibrant public environment. It is an environment rich in know-how, knowledge and experience.

FCAC plays a lead role in financial consumer protection in Canada. As we deliver on our mandate, we must maintain the highest of regulatory standards. Inherent in the strategies that map out our activities is an Agency-wide commitment to communicating, consulting and collaborating—wherever and whenever possible.

Supervision Framework

Canadian consumers face a financial marketplace that is more dynamic than ever before, impacting the way we spend, save and invest our money. As Canada’s financial consumer watchdog, FCAC has to be ready for any challenge on the road ahead. Since we were established 15 years ago, our approach has evolved to position the Agency as a regulator for tomorrow.

Throughout 2015-2016, FCAC undertook an extensive process to develop a new Supervision Framework for more effective oversight of the financial marketplace. Slated to be published later this year, the new framework will enable the Agency to anticipate and respond to issues at the same pace as our financial marketplace is evolving. It will enhance our capacity to achieve results, and to build awareness and knowledge of what we do and what we expect from our stakeholders.

If ever there was a goal dependent on communication, consultation and collaboration, it would be this one.

Communications

Communications, for instance, is assuming an increasingly important role in FCAC’s efforts to adopt a more proactive, risk-based approach to supervision. We are increasing engagement with our regulated institutions because we are confident that, in doing so, we will yield better outcomes for consumers.

Every year, I meet with the CEOs and boards of directors of major financial institutions to remind them of their obligations under the law. In these meetings, in letters and by means of other vehicles, I regularly review each institution’s compliance record, consumer complaints, and level of cooperation. I also seize these opportunities to share the Agency’s priorities and areas of focus.

Last month, at an annual session tailored to the financial services industry, I had the opportunity to address compliance professionals of more than 70 of our regulated institutions. I used this platform to outline in clear terms my expectations, which I expressed to them as asks.

This is what I told them:

Be present:  Embed yourselves in your lines of business, so that you can address issues with new products and services before those products and services are introduced to the market. 

Fixing issues after the fact is no longer enough and increases your institution’s exposure to violations.

Be proactive:  Test the policies and procedures you have in place to comply with the consumer provisions. 

Don’t wait for us to do it. Anticipate issues and prevent them from impacting consumers. 

Be transparent:  Communicate with FCAC early, and often.

Keep us in the loop. If you are involved with the business lines, then you’re able to flag issues and resolve them. And, if you can’t solve them, involve us from the outset as we can work through the issues with you. 

Let’s work on the basis of no surprises.

So my last ask was this:

Act swiftly:  Act swiftly when compliance breaches are identified to rectify them and make consumers whole. 

Having said that, there are times when we cannot always plan and deliver our messages as I did at the industry session. Sometimes, problems arise and we have to respond quickly.

The CBC Go Public story that ran on March 6 is the most obvious and recent example of a situation requiring an immediate and decisive response. As you are no doubt aware, the story was based on accounts from TD Bank employees, who say they signed customers up for products they don’t need to meet what they describe as unrealistic sales quota. Since this story first broke, more news reports have been published on similar breaches occurring at other financial institutions.

By way of a news release and media interviews, we clarified to Canadians the legal obligation of financial institutions to acquire customers’ consent and to disclose key information about the costs and charges of the products they purchase. I also announced that the Agency will immediately start reviewing business practices in the federally regulated financial sector.

Our response to the issues that have been raised is multi-fold—while our focus is fixed on a single outcome: Consumer protection. Consumer interests are always at the heart of FCAC’s work, whether we are responding to an issue, or carrying out our more proactive, day-to-day functions. It’s worth noting that, in calendar year 2016, financial institutions reimbursed customers more than $15 million as a result of our supervisory work.

With a mandate to monitor and evaluate market trends and emerging issues that might impact financial consumers, this review will enable us to:

• Investigate any breaches of the consumer provisions that are found.
• Inform policy discussions.
• Provide consumers with information about their rights and responsibilities, and the risks associated with financial products and services.
• Issue guidance and best practices.

Consultation

Like the Agency’s communications activities, consultations also bring us in contact with diverse groups in all sectors. I regularly meet with my provincial and territorial counterparts, as do others in FCAC. These meetings enable us to stay attuned to issues emerging throughout the country. Over time, this has helped us establish positive relationships and set the groundwork for ongoing collaborations.

Throughout the winter and into the spring, the Agency has been conducting a series of consultations with its counterparts from across the country. You might recall that the Government announced in Budget 2016 its plan to create a new financial consumer protection framework. Legislation was drafted and the new framework was tabled in the House of Commons as part of Bill C-29. The proposed content in Chapter 5 of the legislation was drafted to repatriate consumer provisions in the Bank Act. It also incorporated a principles-based approach that would give the Agency more scope and flexibility.

However, when the bill made its way to the Senate, it received opposition from some senators who argued that sections of the new content would negatively impact the capacity of provincial regulators to protect consumers. As a result, Chapter 5 was removed from the bill, and the federal government directed the Agency to consult with provincial and territorial regulators on best practices related to financial consumer protection.

With a deadline of May 31, 2017 to report our findings to the Minister of Finance, we are working diligently to acquire information and insights that will advance the government’s objectives.

The consultations are an excellent opportunity for the Agency to hear firsthand accounts of exemplary practices. Our findings will not only feed into and enable us to influence future legislation, but will also inspire fresh thinking and planning within the Agency.

Collaboration

As with both communication and consultation, FCAC also pursues opportunities for collaboration. To keep pace with developments within the financial services sector, regulators are naturally inclined to turn to its international counterparts, seeking innovative ideas and guidance. Our goal is to enhance consumer protection and strengthen consumer confidence.

I am the Chair of an international organization of financial supervisory authorities, which is called FinCoNet. It provides a forum for research, discussions and the exchange of information and best practices among its members. The Agency also participates on the G20-OECD Task Force on Financial Consumer Protection. This provides excellent opportunities to hear about lessons learned within different jurisdictions, and to assess what FCAC has in place against others. We also acquire invaluable insights to share with the Department of Finance at policy development sessions.

There is no one way to define collaboration. Collaboration can be as simple as sharing one organization’s materials on your own networks. Last year, I asked you to share some new information materials the Agency produced to support our Rights and Responsibilities campaign. Since last year’s consumer session, FCAC has created new infographics, tweets, web banners and videos. If you attended Peter Gillich’s presentation this morning, you had a chance to see examples of what I’m talking about. 

I am delighted with the great work of FCAC’s creative team. FCAC’s Facebook activities alone had an estimated reach of over 10.2 million Canadians. Our promotional activities on Twitter produced 6.2 million impressions, while YouTube generated 8 million. By reposting and retweeting products like these, you help us expand our reach and enhance our profile as a leader in financial consumer protection.

If you’ve supported us in this way before, please consider doing so again. If you haven’t yet, these products are an excellent way to start.

CPAC

It is my pleasure now to introduce to you a new initiative: The Consumer Protection Advisory Committee—or, more simply, CPAC. CPAC will be made up of a wide range of consumer-focused stakeholders who will engage and consult with FCAC on notable trends and issues. As Chair of this committee, I am determined to ensure its membership is matched with its purpose.

Later this spring, you will receive an invitation to apply. When you do, please consider this: If you’re interested, you should submit an application—because chances are good that you have the kind of dedication to consumer issues that will make CPAC great.

I would like to thank all of you for your attention. If you take away only one message from my presentation, I want it to be that you and the organizations you represent—the excellent work you do—impact consumers more positively than you might be aware.

I appreciate so much your openness to participating in FCAC’s strategic efforts to communicate, to consult and to collaborate. They reflect positively on your commitment to achieving results for consumers, and to your high-level understanding of our shared priorities.

Strategies for meeting the current and future needs of consumers cannot be achieved behind closed doors. FCAC’s doors are open to a world of opportunities to increase our understanding of and our capacity to help financial consumers navigate their way within the financial marketplace.

I am grateful for the contributions of our stakeholders. I am grateful too that you are among these stakeholders.

Now, if you have any questions, I would be pleased to address them.