A new Financial Consumer Framework in the Bank Act will also help to promote confidence in Canada’s financial institutions and system of regulatory oversight
Protections for bank customers have just received a major upgrade. On June 30, new and enhanced consumer protections came into force, as part of a new Financial Consumer Framework in the Bank Act that holds banks to a higher standard.
This includes concerns raised in a 2018 review of domestic retail sales practices of Canada’s six largest banks, in which FCAC found that banks were increasingly focused on selling products and services without a consistently high emphasis on protecting the interests of consumers. In practice, this means that banks must ask themselves: “Do our products and services meet the needs of the customers they are sold to, and do they reflect their circumstances?” Banks must also consider whether their sales practices and reward systems are consistent with achieving these consumer outcomes.
Furthermore, the framework requires banks to pro-actively provide more information to help customers make informed and timely decisions and avoid fees. This includes electronic alerts to help customers avoid going into overdraft or spending over their credit limit, which some banks started sending a few weeks ago already.
Overall, the framework places an increased onus on banks in recognition that achieving good consumer outcomes is a collective responsibility and requires a collective effort. All stakeholders – banks, individuals, government, advocates – have a role to play., released last summer.
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