From deposit insurance to payday lending, Tuesday’s federal budget indicates that the government is looking at several avenues for bolstering consumer protection in the financial sector.
Among a variety of consumer issues touched on in the budget, the government announced Tuesday that it is launching a comprehensive review of the existing deposit insurance system. It promises that the review “will ensure that deposit insurance provides adequate protection for the savings of Canadians, taking into account lessons from the recent financial crisis and significant shifts in the global banking landscape.”
The government is also considering legislative amendments to allow the Bank of Canada to provide banking and custodial services to the Canada Deposit Insurance Corporation (CDIC).
At the same time, the government says that it will take on the high cost of credit card merchant fees in Canada. In the wake of last year’s ruling by the Competition Bureau, citing the negative effects of Visa and Mastercard’s network rules on competition, the government says that it will work to lower credit card interchange and purchase fees that merchants must pay, and that it will promote fair and transparent practices in this area. It also says that it will strengthen the code of conduct that was introduced for the credit card and debit card industries in 2010.
The budget also takes on more specific issues, such as the risk of financial abuse of seniors through powers of attorney and joint accounts. “As banks are often seen by seniors as a trusted authority, it is important to ensure that banks have appropriate and adequate processes and procedures for advising on these matters,” it says in the budget. To that end, the government indicates that it will require, “enhanced disclosure by banks on the costs and benefits of using powers of attorney or joint accounts and more robust bank processes and staff training.”
The government also pledges to raise public awareness of products and practices that may be unduly expensive or restrictive, such as payday loans, or certain mortgage products. It also says it will continue to work on the financial consumer code that was promised in last year’s budget. It also pledges to expand the availability of free, basic banking services to certain groups, such as students, the disabled, and “at-risk” seniors.