The Financial Consumer Agency of Canada (FCAC) is a federal government agency responsible for protecting consumers of financial services and products. FCAC fulfills this responsibility by supervising federally regulated financial entities and by strengthening the financial literacy of Canadians. Through these programs FCAC contributes to the federal financial oversight framework of promoting public confidence in a strong, stable and competitive financial system.
FCAC supervises federally regulated financial entities to determine if they are complying with federal financial consumer protection laws, regulations, codes of conduct and their own public commitments. The entities FCAC supervises are:
- federally regulated financial institutions, which include banks, federal credit unions, federal insurance companies and federal trust and loan companies
- external complaints bodies that deal with customer complaints about banking services and products
- payment card network operators, such as Visa, MasterCard, American Express and Interac
Financial literacy and consumer education
FCAC strengthens the financial literacy of Canadians by informing consumers about their rights and responsibilities when dealing with financial entities. FCAC also provides objective information and tools to help consumers understand and shop for financial products and services.
FCAC monitors and evaluates trends and emerging issues that may have an impact on consumers of financial products and services. For example, industry reviews, such as the report Domestic Bank Retail Sales Practices Review, are one of the research initiatives used to gather information from multiple regulated entities or stakeholders. FCAC industry reviews serve to:
- assess current or emerging issues on a specific topic or theme
- identify and examine industry practices or trends
- verify levels of compliance with market conduct obligations
- collect information for policy discussions
Authority and accountability
FCAC derives its mandate from the Financial Consumer Agency of Canada Act which outlines FCAC's functions, administration and enforcement powers, and lists the sections of federal laws and regulations under its supervision. The Agency is led by a Commissioner whose powers, duties and functions are defined in the FCAC Act. The Commissioner is appointed for a term of up to 5 years and Lucie Tedesco has been serving in this role since September 2013. FCAC reports to the Parliament of Canada through the federal Minister of Finance.
FCAC’s approach to supervision
FCAC's approach to supervision is to ensure institutions are complying with federal financial consumer protection laws, regulations, codes of conduct and their own public commitments. When they are not, FCAC works to bring them back into compliance and change their behaviour while obtaining the best potential outcome for consumers. Through FCAC’s supervision efforts in fiscal year 2016 2017, Canadian consumers were reimbursed approximately $10.5 million by financial institutions. This was to make up for inaccurate disclosure of fees or interest rate calculations, or situations in which accounts were charged incorrectly.
Promoting responsible market conduct: FCAC promotes responsible market conduct by regulated entities because compliance is facilitated when obligations are clearly identified and well understood. FCAC communicates its expectations and interpretations using various tools such as decisions and guidelines and by engaging directly with regulated entities and stakeholders.
Monitoring market conduct: FCAC monitors the market conduct of regulated entities through ongoing assessments of their levels of compliance and the analysis of information from a variety of sources. For example, regulated entities are required to report to FCAC systemic compliance issues and consumer complaints. Each entity that interacts with retail customers is also assigned an FCAC liaison officer, and FCAC engages in open and recurring dialogue with entities to monitor any material changes that may impact their compliance. Additionally, FCAC conducts mandatory annual examinations of each regulated entity to assess its compliance with applicable market conduct obligations or to follow up on corrective measures.
Enforcing market conduct: Enforcement begins with FCAC’s investigation of any potential breach of a market conduct obligation. If FCAC determines that a breach has occurred, it responds with the appropriate enforcement tool(s) to ensure compliance and deter future breaches. FCAC takes enforcement action that is proportionate to the severity and circumstances of a breach.
During the enforcement process, FCAC may require the regulated entity to undertake corrective measures to prevent recurrence of the breach, or to further compliance with market conduct obligations. Depending on the circumstances and severity of a breach, FCAC may issue a Notice of Violation for a breach of legislative obligations, or a Notice of Non-Compliance for a breach of a voluntary code of conduct or public commitment. Outcomes following these notices may include an administrative monetary penalty and publication of information about the breach and the entity responsible.