Since 2013, the government has been promising ‘to develop a comprehensive financial consumer code’. It’s been referenced in every single Budget since then. In many countries, there are consumer codes that protect people while banking. These can vary, but most at least have some substantive rules and a set of consumer protection principles for the financial institutions to follow. Canada, by contrast, has some ad hoc consumer protection rules that have been added haphazardly to the Bank Act, Canada’s original governing document for banking, while other rules are in voluntary codes of conduct or even voluntary ‘gentleman’s agreements’ between the government and the banks.
PIAC has advocated over the past few years on something we referred to as the ‘Financial Consumer Code’. We believed it was an opportunity to clear up a lot of the murkiness of consumer rights when it came to banking. After a long process of consultation, and the drafting of a framework by the government, what was left of the ‘Financial Consumer Code’ was found in Bill C-29, a Budget implementation act.
PIAC examined Bill C-29 and concluded that wouldn’t substantially improve the protection of bank customers and might possibly make things worse. Instead of a document which gave solid rights to consumers everywhere, the bill potentially undercut certain stronger provincial laws, provided no new plans for complaints resolution (even though the current regime allows a bank to choose its external ombudsman – an obvious conflict of interest), and seemed to declare the convenience of bankers to be more important than the protection of consumers.
“Bill C-29 does not address real problems such as banks unilaterally changing any provision in their terms and conditions or disclaiming in their terms and conditions any liability for mistakes or negligence,” stated John Lawford, Executive Director of PIAC, before the Senate of Canada. “Contrast the Consumer Protection Code established by the Central Bank of Ireland, which requires banks to act with skill, care and diligence in the best interests of consumers, and which prohibits in principle exclusionary clauses.”
After allegations about aggressive sales tactics by TD Bank employees became big news in Canada, it has become even more apparent that the practices and policies of the banks need to be looked at and that consumers need some protections in place.
“Employees at TD bank, it’s alleged, were raising credit limits without permission, issuing credit cards without consent, things like that. Non-disclosure and consent were the two main irritants for us, because they’re definitely not allowed,” said Jonathan Bishop, Research Analyst at PIAC. “When we read these reports it re-ignited our concern of the need for a financial consumer code. A few days after our own blog post on the CBC story, the CBC posted another story saying this wasn’t just TD, it was many banks in Canada. So it’s obvious, we need to do something to protect consumers.”
After PIAC appeared before the House of Commons and Senate to make its case against these ‘new rules’, they were, soon after, taken out of the budget bill. There is now a promise of another attempt at a ‘financial code’ for consumers in a separate consumer protection in banking bill. The Minister of Finance has since began a survey of the provincial laws which touch on banking, with the idea of putting together a new bill that protects provincial rules.
PIAC hopes to assist with this process by creating a list of proposals for this bill, based on codes in other countries which have worked for consumers there. With a strong national code to protect consumers on top of the provincial rules currently in place, banking would become a much more reliable and safe place for consumers. The survey should see some results by Fall 2017.