OTTAWA, October 3rd, 2005 -- Today the Financial Consumer Agency of
Canada (FCAC) released its third annual report. The report outlines how the
Agency's activities as a regulator of market conduct contribute to a healthy,
competitive and fair marketplace.
"As Canadian consumers participate in an increasingly complex financial
marketplace, they face considerable challenges. In such a marketplace, clear and
accurate consumer information is essential to making informed choices, as is
appropriate market conduct," explains FCAC Commissioner Bill Knight.
"As a market conduct regulator, our job is to ensure that all participants
in the system have the information they need. This annual report shows that,
with greater awareness, consumers and the industry can identify problems and
work together to improve Canada's financial system."
During fiscal year 2004-05, FCAC improved the Canadian financial marketplace
for millions of consumers by:
conducting its third annual general examination of all 424 federally
regulated financial institutions to evaluate how they comply with the applicable
consumer provisions;
updating FCAC's compliance framework, which details how the Agency executes
its mandate for supervising a financial institution's compliance with the
consumer provisions, set out in legislation, codes of conduct and public
commitments;
conducting a large-scale mystery shopping exercise to measure the banks'
performance in complying with the new Access to Basic Banking Services
Regulations. The results of the exercise will be analyzed during 2005-06;
reviewing the clarity of language used by banks in the disclosure of the
prepayment penalty clause in mortgage documents. The Agency examined more than
100 mortgage documents in English and French containing mortgage prepayment
clauses. The review revealed common weaknesses in the documents of many of the
Canadian banks. FCAC required the institutions involved to take corrective
measures and has closely monitored the implementation of these changes;
monitoring the Canadian Code of Practice for Debit Card Services
for federally regulated financial institutions, which stipulates that, under
certain conditions, consumers will not be held liable for unauthorized use of
their debit card. During 2004, the industry revised the code to clarify the
procedures for dealing with unauthorized transactions and other transaction
problems. Now that the revised code is in place, FCAC will continue to monitor
how federally regulated financial institutions comply with it.
Through its outreach initiatives, FCAC has informed millions of Canadians
about their rights as consumers of financial products and services. During
fiscal year 2004-05, FCAC responded to
26,145 inquiries and complaints from consumers. This represents a remarkable 69
percent increase in demand over the previous year, and more than double the
number handled during FCAC's first full year of operation, 2002-03.
FCAC met this demand for information from financial consumers by:
conducting focus-testing sessions to revise and redesign its brochures, to
produce plain-language publications for audiences with lower-income and
lower-literacy levels, making important financial information more accessible
and easier to understand;
distributing more than 500,000 copies of its consumer publications, in
print as well as through its Web site;
updating and developing new publications such as The ABC's of
Mortgages and The Cost of Payday Loans; and issuing a revised
version of The Cost of Banking Guide, Credit Cards and You,
Cashing your Government of Canada Cheque for Free and Opening a
Personal Bank Account;
providing interactive tools on its Web site, such as two new databases
designed to keep consumers informed about branch closures and complaint-handling
procedures pertaining to various financial institutions;
providing one of the most extensive "Questions and Answers"
sections pertaining to financial services in Canada on its Web site. This
database is quickly becoming Canada's pre-eminent source of current financial
consumer information;
making important banking information more accessible to lower-income and
lower-literacy consumers by forming strategic partnerships with the Canada
Revenue Agency and Social Development Canada. FCAC distributed information about
consumers' rights to a bank account, access to low-fee accounts and the
direct-deposit option for federal government cheques to 7.5 million consumers,
through mailing inserts. As a result, more than 230,000 Canadians switched to
direct deposit to receive their GST and Child Tax Benefit cheques.
Commenting on the Agency's achievements this past year, Commissioner Knight
reveals one of the things he is most proud of: "We are establishing new
ground in the marketplace by identifying information gaps and by subsequently
providing consumers with the information they need to make sound financial
decisions and actively participate in-and-strengthen the financial services
marketplace. As we have done since we began operations, we will continue to work
proactively to inform Canadians about financial matters and, through our
oversight and monitoring of the federally regulated financial industry, protect
their rights."
The complete annual report, along with other FCAC publications, is available
in the Publications section of FCAC's Web site, at www.fcac.gc.ca and through
FCAC's Consumer Contact Centre, at
1-866-461-3222.
FCAC ensures compliance with the consumer protection laws that apply to banks
and federally incorporated trust, loan and insurance companies. FCAC also
provides consumers with accurate and objective information about financial
products and services, and informs Canadians of their rights when dealing with
financial institutions.
HighlightsValue for Canadians: FCAC's 2004-05 Annual
Report
Compliance statistics
FCAC investigates complaints involving non-compliance with:
the consumer provisions in the federal legislation regulating financial
institutions, and
the voluntary codes and public commitments adopted by financial
institutions.
During fiscal year 2004-05, FCAC opened 1,342 compliance
cases:
FCAC closed 771 cases involving compliance issues related to the consumer
provisions. Of these, 26 involved a total of 30 violations (a single case can
involve more than one violation).
FCAC closed 206 cases related to codes of conduct and public commitments.
In general, the top three issues identified in these cases were related to
credit cards (zero liability), the debit card code and the accessibility of
complaint procedures. Of these, there were four instances of non-compliance
pertaining to the Code of Conduct for Authorized Insurance Activities and the
Credit Card Zero Liability Public Commitment.
As of March 31, 2005, FCAC closed 1,142 compliance cases.
As a result of FCAC's monitoring activity, the Commissioner issued 14 Letters
of Reprimand, entered into 1 Compliance Agreement and issued 2 Notices of
Violation, with Administrative Monetary penalties totalling $80,000.
Branch closures
Banks and federally regulated trust and loan companies are required to file
notices with FCAC if they intend to close a branch.
In fiscal year 2004-05, FCAC received 143 branch closure filings from the
financial institutions. In total, there were three cases closed, with 4
violations identified in regards to branch closures where the financial
institutions involved failed to meet the filling requirement. There were only
two cases in which the Commissioner required a public meeting with FCAC, the
bank and other interested parties in the community to discuss the closure.
Inquiries and complaints
During the period being reported on, FCAC received 28,788 consumer contacts
(which includes
in-person visits, phone calls, e-mails and regular mail). Excluding general
inquiries (12,514), the top five categories into which these inquiries and
complaints fell are as follows:
accounts (4,795)
loans (2,191)
credit cards (1,960)
investments (1,416)
insurance (1,096)
Publication statistics
FCAC distributed more than 500,000 publications to Canadian financial
consumers during fiscal year 2004-05, including both printed (173,541) and
downloaded (342,810) publications. This is an increase of 61 percent (516,351)
over 2003-04 (313,063). The most frequently downloaded FCAC publication was the
multi-piece Credit Cards and You kit (72,469), followed by brochures
describing Canadians' rights when opening a bank account.
Web site statistics
During the past year, FCAC's Web site averaged close to 1,300 visitors per
day, almost double the daily average for the previous year. There were more than
450,000 visits to the site in
2004-05, up from 254,854 in 2003-04. In fact, the number of visits to FCAC's Web
site has more than tripled since the Agency's first full year of operations,
2002-03.
Financial reporting
FCAC is funded by assessments on Canada's federally regulated financial
institutions. For its third full year of operations, FCAC's expenses totalled
$7.25 million - below its projected budget of $7.75 million.
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Media contacts:
Martine Bélanger
Media Relations Officer
(613) 941-8982
belanger.martine@fcac.gc.ca
Christina McDonald
Communications Officer
(613) 941-4168
mcdonald.christina@fcac.gc.ca
