FCAC powers and penalties come into force

Summary#

This is an order (SI/2020-35) that fixes April 30, 2020 as the day some provisions of the Budget Implementation Act, 2018, No. 2 come into force. Those provisions amend the Bank Act and the Financial Consumer Agency of Canada Act to give the Financial Consumer Agency of Canada (FCAC) stronger powers and a clearer consumer-protection mandate.

What it does#

• Fixes April 30, 2020 as the coming-into-force date for certain provisions of the Budget Implementation Act, 2018, No. 2.
• Updates the mandate of the Financial Consumer Agency of Canada (FCAC) to explicitly require protecting the rights and interests of consumers and the public, while taking into account banks’ need to run their businesses.
• Gives the FCAC Commissioner new enforcement powers, including:
  • ordering banks to comply with consumer-protection rules;
  • ordering restitution when charges were improperly collected; and
  • compelling banks to undergo third-party independent audits.
• Raises the maximum administrative monetary penalties to $1 million per violation for a person and $10 million per violation for an entity.
• Requires the Commissioner to publicly name an entity found to have violated consumer provisions, and to publish the nature of the violation and the penalty.
• Notes that other parts of the new bank consumer-protection framework in the same Act will come into force later, after supporting regulations are developed and industry prepares.

Who's affected#

• Federally regulated banks and other institutions covered by the Bank Act.
• Customers of banks and people who use bank products and services (individuals and small businesses).
• The Financial Consumer Agency of Canada (FCAC), which will have broader powers and responsibilities.
• Consumer groups, provinces and territories were consulted and may follow effects; the broader public could notice changes through bank practices or enforcement actions.

Why it matters#

• Consumers may get stronger protection and a clearer path to restitution if banks break consumer rules.
• Banks face higher fines ($1 million and $10 million) and the possibility of public naming, increasing financial and reputational risk for non-compliance.
• The FCAC can be more proactive and forceful in supervision, including ordering audits, which could change how banks design and sell products.
• Some important consumer-protection measures are not yet in force; this order brings core enforcement tools into effect but more changes may follow once regulations and industry adjustments are made.