Following a review of banks’ sales practices, which found shortcomings in how banks deal with the risk of mis-selling,
The Ottawa-based Financial Consumer Agency of Canada (FCAC) has adopted a new supervisory framework and created a new enforcement division.
Effective Oct. 1, the FCAC has implemented a new supervision framework that will require the firms it regulates to proactively identify and address conduct risks, and report on this to the regulator.
The new framework will enable FCAC to proactively monitor federally regulated financial institutions and ensure they continuously assess and improve their internal controls to meet their obligations to financial consumers, the agency says in a news release.
“The framework will also assist the agency in its efforts to understand emerging risks before they impact consumers,” the FCAC says.
The new framework follows from a review of banks’ sales practices published in March, which found shortcomings in how banks deal with the risk of mis-selling,
Additionally, the agency has also created a new enforcement division, which will “bolster the rigour and independence of the agency’s investigation function and improve its ability to protect Canadians.”
The shift in approach at the FCAC comes in the wake a review of sales practices at the banks. The review found that retail banking culture is highly focused on sales, which increases the risk of mis-selling, and banks’ oversight and controls to identify and mitigate mis-selling risks are insufficient.
“Robust and effective consumer protection is vital to maintaining public trust in Canada’s strong, stable, and competitive financial system. The new supervision framework establishes a strong foundation for the future, and strengthens FCAC’s oversight,” says Lucie Tedesco, commissioner of the FCAC, in a statement.