Financial consumer watchdog vows to get ‘more proactive’ in handling banks, new chief says
The new head of the Financial Consumer Agency of Canada is promising the federal regulator will be much more active as it prepares to enforce new consumer-protection measures and tries to keep an evolving banking sector in line.
Those changes have made it clear the FCAC needs to “take this time to move to the next stage of our evolution,” said Judith Robertson, who became the agency’s new commissioner in August.
“And we will be more engaged, more proactive and more transparent,” Robertson told the Financial Post in a December interview.
The 2019-2020 business plan for the FCAC, which is supposed to promote financial literacy and ensure federally regulated financial institutions follow consumer-protection rules, said the agency would continue implementing a new supervision framework and keep building its “capacity to discharge its oversight and enforcement responsibilities.”
“It will give increased focus to proactively identifying emerging risks before they affect consumers and to communicating with financial entities to help them achieve and maintain compliance,” the report added.
This followed an FCAC review, released in 2018, that found that Canada’s six biggest banks had aggressive sales cultures and lacked adequate controls to protect consumers from the resulting risks, including the risk of being misled about products.
Lawyers from one major Canadian law firm, Torys LLP, published a report at the end of October saying that, based on the recent initiatives and activities of the FCAC, they believed enforcement activity “is poised to increase.”
“In the last few weeks, we have been retained by clients who have received proposed notices of breaches and we expect more are likely to be received later this year,” the lawyers wrote.
We will be more engaged, more proactive and more transparent
There were two FCAC decisions on notices of violation published in 2019, compared to four in 2018, three in 2017 and one in 2016.
Robertson said the agency does plan on expanding its approximately 150-person workforce over the next few years, but she poured cold water on any assumption of more enforcement activity.
“I understand that any time there’s a change there is uncertainty and maybe even some concern,” she told the Post. “The FCAC views, and I view, enforcement as one of our tools as a regulator that we use. It needs to be definitely part of our tool kit, but that’s not our sole focus at all.”
Prior to joining the FCAC, Robertson was as a commissioner on the Ontario Securities Commission and a director of the Financial Services Regulatory Authority of Ontario.
Her appointment also comes as the federal government has been taking steps to ratchet up consumer-protection measures.
In the wake of the sales practice report, the federal government passed legislation in 2018 intended to toughen up the FCAC’s mandate and give it new powers, including increasing the level of fines the regulator can levy against offending financial institutions, although that change has yet to come into effect.
Another such step is a plan to create a new “Canadian Consumer Advocate,” which the Liberals said in their fall campaign platform would “serve as an independent, single point of contact for people who need help with banking, telecom, or transportation-related complaints, and will be empowered to review complaints and, if founded, impose appropriate penalties.”
Robertson said they welcomed the announcement.
“At the same time, it’s understood that the FCAC has the regulatory responsibility over banks with regard to complaint handling so we will continue our efforts there,” she said.
Following the sales-practice report, the government also commissioned the FCAC to review the complaint-handling processes of banks and the effectiveness of external complaint bodies, a subject near and dear to some consumer advocacy groups. That work has been submitted to the government, Robertson said, with findings to be published in early 2020.
Still, legislative changes concerning the FCAC and the federal government’s new framework for protecting financial consumers have not come into effect. A Department of Finance official previously told the Post that implementing the new measures will require supporting regulations they were still working on.
One such incoming change Robertson noted is that a bank would have to ensure the products and services it sells to a person are appropriate for their financial needs.
“Canadians should expect that I will spend all of my talents and energy focused on our mandate,” she said. “And our mandate is consumer protection.”