National Post (National Edition)
Watchdog monitoring banks' Covid-19 relief
‘Fair and appropiate’: FCAC
the country’s biggest banks to defer mortgage payments or provide other forms of assistance to coronavirus-affected customers will be watched closely and regulated accordingly by the Financial Consumer Agency of Canada, the head of the federal watchdog says.
“We do absolutely view that as an area where we have an interest in ensuring that whatever is implemented is done in a fair and appropriate way,” Judith Robertson, the FCAC’s commissioner, said in an interview. “And so we will be working with the banks on how we can monitor that, monitor their commitments, monitor the effectiveness of those measures and set appropriate expectations.”
Canada’s Big Six banks announced last week they were prepared to provide personal and small business customers financial assistance “on a case-by-case basis” if consumers found themselves facing COVID-19-related problems. The largely unprecedented offer included up to a six-month payment deferral for mortgages, as well as other possible relief, with other, smaller lenders taking similar steps.
Already, though, banks have been swamped with calls and customers have been voicing frustration online.
The Canadian Bankers Association issued an additional statement on Sunday, saying coronavirus-affected customers “who are currently in good standing” can apply for mortgage relief. The industry group also said the COVID-related mortgage-payment deferral is available “for an indefinite period” and that customers don’t currently have a deadline to apply.
“Customers should understand that this is not mortgage forgiveness,” the CBA said. “Mortgage deferral means that payments are skipped for a defined period of time, during which interest which would otherwise be part of the deferred payments is added to the outstanding balance of the mortgage.
The added interest is incorporated into the monthly payment, either when payments resume at the end of the deferral period or upon renewal at the end of the mortgage’s term.”
Robertson said on Friday that the banks’ offer of relief was an important message to send to consumers, but that “not all the details” were in place yet. She also said the FCAC had been receiving calls from people seeking “unbiased” information during the outbreak.
FCAC, like other regulators, has had to adjust its operations and focus because of the COVID-19 pandemic. Employees are working from home and the watchdog says it has been “reprioritizing” its supervisory and regulatory work.
The top priority for the agency is to ensure Canadians have access to basic banking services during the crisis. However, one example Robertson gave where the FCAC could show flexibility was around branch closures. If there was to be a coronavirus case suddenly reported at a branch, a lender may have to shut it down faster than usual, which might make giving the required amount of notice more difficult.
“So we wanted to be sure that banks understood that we weren’t looking for unreasonable expectations in that type of circumstance,” Robertson said. “But on the other hand, we also set out expectations, which have been well-received, that banks also needed to be focused on ensuring access to the basic banking services that Canadians rely on.”
It’s a fine line other regulators are having to walk in relatively uncharted territory. Robertson noted “larger-scale” projects and policies could face delays, depending on how long the coronavirus crisis lasts.
The federal government has also been implementing a new framework for protecting financial consumers, but most of Ottawa’s focus right now seems to be on ensuring businesses and consumers get financial assistance as fast as possible.