OTTAWA EYEING BANKS, TELCOS
New protection for consumers could be on way
With a year to go before Canadians head back to the polls, there are signs the Trudeau government is mulling new measures intended to protect consumers in their dealings with banks and telecommunications companies.
One of the signs came following this summer’s cabinet shuffle, which saw Filomena Tassi assume the role of seniors’ minister.
As part of a mandate letter to Tassi, Prime Minister Justin Trudeau asked that she “support the Ministers of Finance and Innovation, Science and Economic Development on the design and implementation of initiatives to better protect consumers, particularly seniors, from high-pressure sales tactics, overbilling, fraud and other potential harms in dealing with financial institutions and telecommunications companies.”
The letter stood out for its pointed language (“fraud and other potential harms”) and the fact that neither the finance nor the ISED ministers — Bill Morneau and Navdeep Bains, who remained in their posts — received new mandate letters.
It is not clear what sort of initiatives could be deployed, but the new mandate comes as a public inquiry on telecom sales practices is about to kick off and as consumer advocates say action from Ottawa is overdue in the financial sector.
Earlier this year, the Financial Consumer Agency of Canada — the entity tasked with ensuring federally regulated banks comply with consumer protection rules — published a report that found a sales-focused culture at the Big Six banks had potentially increased the risk of mistreating customers.
The FCAC, however, said in its report that it did not find “widespread mis-selling” of products or services.
The federal government has promised to toughen up the FCAC, but no FCAC-related legislation was part of the Liberal government’s budget bill earlier this year, and with the next federal election scheduled for Oct. 2019, the window to do so is closing.
A spokesperson from the Department of Finance Canada said in an email that consumer protection had been identified as a priority in the 2018 budget. The proposal around legislation for the FCAC, the ministry said, would “strengthen” the agency’s tools and mandate “and continue to advance consumers’ rights and interests when dealing with banks.”
“The Government has undertaken targeted consultations with stakeholders, including provinces and territories,” the spokesperson wrote. “The Government takes the protection of financial consumers very seriously and intends to ensure that all Canadians benefit from strong consumer protection standards.”
On the telecom front, the Trudeau government has ordered a public inquiry be held to probe allegations of aggressive sales tactics. The Canadian Radio-television and Telecommunications Commission is to start public hearings this month, with a report expected by February.
In the meantime, Canada’s Competition Bureau recently filed a submission in connection with the inquiry that stated the agency “regularly deals with allegations of false, misleading or deceptive marketing practices in the telecommunications industry.”
Asked by the Financial Post if there were going to be any consumer protection measures introduced in the near future, Bains said “there’s no specific date that’s been locked down that I can share at this moment.”
“We’ll definitely look at the recommendations (of the CRTC) and act accordingly,” he added in an interview.
Other recent developments have prompted consumer advocates to push Ottawa to take action, such as the recent decision by Bank of Nova Scotia to stop using a not-for-profit external ombudsman and instead start using a for-profit one. The move will leave the nonprofit outfit, the Ombudsman for Banking Services and Investments, with just two of Canada’s Big Five banks remaining under its watch for banking-related complaints.
A spokesperson for the Department of Finance Canada said Ottawa “takes the protection of financial consumers very seriously.”
Advocates, however, are waiting for more than words.
“We have a landscape that’s really tilted against consumers,” said Wanda Morris, chief advocacy and engagement officer at CARP, the former Canadian Association for Retired Persons.
Morris said her group has heard rumblings of something coming from Ottawa, and noted that it is “incredibly telling that you have to have a mandate letter saying consumers deserve to be protected, particularly older consumers.” CARP still has their reservations, though.
“Nobody has said, ‘Great, we’re seeing the really strong, robust reforms that are needed,’ so I’m not sure that we’re getting enough,” Morris said.
In Australia, a sweeping inquiry into misconduct in the financial services industry “has brought public attention and condemnation” with its findings, according to the inquiry’s recently released interim report.
With regards to the seniors minister’s mandate, a spokesperson for the Canadian Bankers Association noted that the 2018 budget had signalled the government was readying a consumer code for financial services, “which the CBA supports, and the mandate you cite is in line with that initiative.”
John Lawford, the executive director of the Public Interest Advocacy Centre, said they are expecting some kind of consumer protection push from Ottawa when it comes to the banks. Their expectations, however, are not exactly high.
“I don’t expect the legislation to be anything more than a warming-up of leftovers from previously,” Lawford said. “This government hasn’t shown itself to be, despite the big talk, a champion of bank customers at all, and so we’re a little bit testy with them.”