New and enhanced protections for bank customers
July 1, 2022
Global Korean Post
Starting June 30, Canadians will benefit from new and enhanced protections in their dealings with banks. The protections fulfil commitments made by the federal government in 2018 to introduce a new Financial Consumer Protection Framework (Framework) in the Bank Act.
The Framework holds banks to a higher standard and requires them to take greater responsibility for consumer outcomes. For example, they must strengthen their complaint-handling procedures and provide more information to their customers so they can make informed and timely decisions. The Framework also requires banks to meet higher standards in their sales practices, including providing products and services to their customers that are appropriate based on their financial needs and circumstances.
Among the new and enhanced protections that take effect on June 30, banks must:
- Deal with customer complaints within 56 days. This is the first time that banks will be required by law to deal with complaints within a specific period.
- Ensure that the way they pay their employees does not interfere with the new obligation to offer and sell products and services that are appropriate for their customers.
- Send electronic alerts to their customers to help them avoid going into overdraft or spending over their credit limit, which can result in fees.
- Provide advance notice so customers can decide if they want to renew or cancel their products or services.
- Provide separate agreements for each product and service so customers understand what they are buying, how much it will cost, and how to cancel an agreement.
- Comply with broader protections against providing misleading information or using coercive sales practices.
In addition, banks will have to create a whistleblowing program for their employees to encourage them to come forward if they notice problems. Bank employees are often the first to know about issues and can help expose problems that could otherwise go unreported. Bank employees will also be able to report wrongdoings to the Financial Consumer Agency of Canada (FCAC) or the Office of the Superintendent of Financial Institutions (OSFI).