Opening remarks by Judith Robertson, Commissioner, Financial Consumer Agency of Canada, for the 2022 Payments Canada SUMMIT

April 26, 2022

Virtual event, Ottawa, Ontario

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Thank you. I’m pleased to be here with my colleagues to share our perspectives on digital innovation and the federal financial safety net.  

To be sure, this is a pivotal time for financial institutions and regulators alike. 

We face a multitude of evolving factors, from changing consumer behaviors, intensifying competition, regulatory changes, and technological disruptions and opportunities. 

FCAC’s role is to protect consumers of financial products and services and we do that by overseeing compliance by federally regulated financial institutions with consumer protection and market conduct requirements.

These requirements typically fall into 3 main buckets:  effective disclosure, meaningful consent, and fair and efficient complaint handling or problem resolution. 

We also conduct research and lead a national network of stakeholders to strengthen the financial literacy of Canadians.

Taken together, our role is designed to address the fundamental knowledge and power differences between individuals and large, sophisticated financial institutions.

This of course is based on the premise that our financial system works best if consumers have the knowledge they need to make good choices and that they are provided with real choice that addresses their financial needs without manipulation or coercion.  And finally, they need to have the confidence that when problems arise, they will be resolved quickly and fairly.

You will note that all of the speakers on this panel have emphasized the importance of promoting and enhancing confidence in the financial system.  This is even more important in a period of change.

In our work, we have identified 2 key drivers of change that we are using to help us evolve and adapt to this new environment.

First, we are witness to and advocates for a major global shift in how consumer protection is regulated, from one based on prescriptive rules to one based on achieving good consumer outcomes.

This shift to an outcomes focus puts more onus on institutions rather than individual consumers. 

A good example of this development is found in Canada’s new Financial Consumer Protection Framework in the Bank Act. 

It includes many new and enhanced protections that will come into force this coming June 30 and will align us with best practices in other jurisdictions. 

The new rules will require banks to:   

• engage in responsible business conduct  

• provide timely complaints handling services to consumers 

• disclose key product information to consumers to help them make informed decisions and avoid unnecessary fees 

Taken together, these new protections will help us move away from a “buyer beware” environment to one based on a “shared responsibility” between the consumer and the provider of bank services.

As an example, banks will have a new obligation to offer products that are appropriate for their customers and reflect their financial needs and circumstances.

Banks will also have to ensure that the financial incentives of their employees do not interfere with this obligation to offer or sell appropriate products. 

In short, it will be the responsibility of the provider to validate that their sales process considers the needs and abilities of consumers – including those in vulnerable circumstances.

The second long term driver that is shaping consumer protection is the need to ensure that consumers benefit from consistent standards as products and markets evolve.

Market innovations must, at a minimum, address these fundamental protections:  

• clear and simple language that is not misleading 

• no coercion or tied-selling and express consent

• a robust complaints-handling system which prioritizes a fast and seamless process for the consumer

Consumers do not currently have, and should not be expected to acquire, the knowledge about different regulatory standards as part of their product choices.

For consumers to have confidence in the financial system, they should be able to have a reasonable expectation that the base-level requirements of disclosure, consent and problem resolution will be respected, whether the product is provided by a bank or its affiliate, a new entrant or a third-party distribution partner.

A consistent standard expectation also provides an advantage to industry as it should be able to rely on a level playing field with no regulatory overlap or opportunities for regulatory arbitrage.

It’s important to note that consistent does not mean identical —this is where the focus on outcomes is helpful — it allows us to be proportionate and adaptive, focusing on what really makes a difference.

These changes are daunting to operationalize for both industry and regulators alike.

But, taken together, they offer an exciting opportunity to support innovation and competition without sacrificing consumer protection.

I will stop there. I am looking forward to discussing today’s topics.