Financial Consumer Protection Framework Regulations: SOR/2021-181

Canada Gazette, Part II, Volume 155, Number 17

Registration
SOR/2021-181 August 4, 2021

TRUST AND LOAN COMPANIES ACT
BANK ACT
INSURANCE COMPANIES ACT
COOPERATIVE CREDIT ASSOCIATIONS ACT
PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT

P.C. 2021-805 August 4, 2021

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, makes the annexed Financial Consumer Protection Framework Regulations pursuant to

Financial Consumer Protection Framework Regulations

Interpretation

Definitions

1 The following definitions apply in these Regulations.

Act
means the Bank Act. (Loi)
APR or annual percentage rate
means the cost of borrowing for a loan under a credit agreement, expressed as an annual rate on the principal referred to in subsection 47(1). (TAC ou taux annuel du coût d'emprunt)
disbursement charge
means a charge, other than one referred to in subsection 48(1), to recover an expense incurred by an institution to arrange, document, insure or secure a credit agreement. It includes a charge referred to in any of paragraphs 48(2)(c) or (f) to (h). (frais de débours)
insurer
includes a government agency that provides insurance referred to in subsection 627.992(1) of the Act. (assureur)
principal
means the amount borrowed under a credit agreement but does not include any cost of borrowing. (capital)
public index
means an interest rate, or a variable base rate for an interest rate, that is published at least weekly in a newspaper or magazine of general circulation, or in some media of general circulation or distribution, in areas where natural persons who — for purposes other than business purposes — have entered into credit agreements that are governed by that rate reside. (indice publié)

Interpretation — product or service

2 For the purposes of Part XII.2 of the Act, the expression “product or service” does not include a derivative, as defined in subsection 415.2(2) of the Act, or an eligible financial contract, as defined in subsection 415.2(3) of the Act.

PART 1

Fair and Equitable Dealings

Responsible Business Conduct

Requirements for Cancelling Agreements

Cancellation period — certain deposit accounts

3 For the purposes of paragraph 627.1(1)(b) of the Act, the prescribed period in respect of a deposit account other than a retail deposit account is 14 business days after the day on which the deposit account is opened.

Prescribed products and services

4 For the purposes of section 627.11 of the Act, the following products and services are prescribed products and services:

Cancellation of retail deposit account

5 (1) For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of a retail deposit account that the person notify the institution of the cancellation within 14 business days after the day on which the retail deposit account is opened.

Obligations of institution

(2) For the purposes of subsection 627.11(2) of the Act, the following requirements are prescribed requirements for the cancellation of the agreement:

Cancellation of deposit-type instrument

6 (1) For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of a new deposit-type instrument referred to in subsection 627.78(2) of the Act that the person notify the institution of the cancellation within 10 business days after the day on which the instrument is issued.

Obligations of institution

(2) For the purposes of subsection 627.11(2) of the Act, the following requirements are prescribed requirements for the cancellation of the agreement:

Cancellation of optional product or service

7 (1) For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of an optional product or service that the person is to notify the institution of the cancellation.

Obligation of institution — timing

(2) For the purposes of subsection 627.11(2) of the Act, it is a prescribed requirement for the cancellation of the agreement that the institution is to cancel the optional product or service on the day on which the billing cycle ends or 30 days after the notification is received, whichever is earlier.

Obligation of institution — credit or refund

(3) For the purposes of subsection 627.11(2) of the Act, it is a prescribed requirement for the cancellation of the agreement that the institution is to refund or credit the person with the amount determined by the following formula:

R = A × ((n – m)/n)
where
R
is the amount to be refunded or credited;
A
is the amount of any charges that are paid by the person for any part of the optional product or service that is unused as of the day the cancellation takes effect;
n
is the period between the imposition of the charges and the time when the optional product or service was, before the cancellation, scheduled to end; and
m
is the period between the imposition of the charges and the cancellation.

Cancellation of principal-protected note

8 For the purposes of subsection 627.11(1) of the Act, it is a prescribed requirement for the cancellation of an agreement in respect of a principal-protected note referred to in paragraph 4(b) of these Regulations that the person notify the institution of the cancellation within two days after the day on which the agreement is entered into.

Access to Basic Banking Services

Availability

9 For the purposes of section 627.21 of the Act, the prescribed amount is $1,500.

Cashing

10 For the purposes of paragraph 627.25(1)(c) of the Act, the prescribed amount is $1,750.

Credit

Prepayment

11 (1) For the purposes of subsection 627.28(4) of the Act, the charges referred to in subsection 48(1) of these Regulations, excluding any interest or discount applicable to the loan and any disbursement charges paid by the person or added to the balance of the loan, are prescribed charges.

Refund or credit

(2) For the purposes of subsection 627.28(4) of the Act, the prescribed amount in relation to a prepayment referred to in paragraph 627.28(3)(a) of the Act is either

R = A × ((n – m)/n)
where
R
is the amount to be refunded or credited;
A
is the amount of any non-interest charges, except for disbursement charges, paid by the person or added to the balance;
n
is the period between the imposition of the non-interest charges and the scheduled end of the term of the loan; and
m
is the period between the imposition of the non-interest charges and the prepayment.

Renewal of mortgages — prescribed period

12 (1) For the purposes of paragraph 627.31(a) of the Act, the prescribed period is the period beginning on the day on which the prescribed information is disclosed to the person under subsection 627.89(6) of the Act and ending on the day on which the credit agreement is renewed.

Renewal of mortgages — prescribed day

(2) For the purposes of paragraph 627.31(b) of the Act, the prescribed day is the day that is 21 days after the day on which the prescribed information is disclosed to the person under subsection 627.89(6) of the Act.

Debt collection practices

13 For the purposes of paragraph 627.37(b) of the Act, the debt collection practices set out in the schedule are prescribed debt collection practices.

Complaints Process

Period for dealing with complaints

14 For the purposes of paragraph 627.43(1)(a) of the Act, the prescribed period for dealing with a complaint is 56 days after the day on which the complaint is received.

Provision of information after complaint

15 For the purposes of paragraph 627.43(4)(b) of the Act, one of the following documents must be used to provide the information referred to in that paragraph:

Conditions for maintaining approval

16 For the purposes of paragraph 627.49(m) of the Act, the following are prescribed conditions for the body corporate:

Provision of information to customers and public

17 For the purposes of section 627.65 of the Act, one of the following documents must be used to disclose the information referred to in that section:

PART 2

Disclosure and Transparency for Informed Decisions

Key Product Information

General

Disclosure by mail

18 If information that must be disclosed under Part XII.2 of the Act is sent by mail, it is deemed to have been disclosed on the fifth business day after the postmark date.

Renewal or rollover

19 For the purposes of paragraph 627.6(2)(a) of the Act, the interest rate is disclosed if it is provided directly to the person or indirectly by means of a telephone number or website that can be accessed by the person.

Deposit Accounts, Financial Instruments and Notes
Deposit Accounts

Agreement by telephone

20 (1) For the purposes of subparagraph 627.55(2)(a)(ii) of the Act, the following information is prescribed information in relation to a deposit account:

Use of generic terms

(2) For the purpose of providing the information referred to in paragraphs (1)(g) and (h), an institution may group similar types of transactions for which the institution charges the same amount under a generic term.

Charges for prescribed services

21 For the purposes of subparagraph 627.68(b)(i) and subsection 627.72(1) of the Act, the following services are prescribed services:

Opening of deposit account

22 For the purposes of paragraph 627.69(1)(d) of the Act, the following information is prescribed information:

Non-application — subsection 627.72(1) of Act

23 Subsection 627.72(1) of the Act does not apply in respect of an increase to a charge applicable to a service referred to in section 21 of these Regulations that is in relation to a deposit account in Canada other than a personal deposit account if the institution and the person agree in writing that the institution will charge an amount other than an amount that the institution is required to disclose under section 627.68 of the Act.

Deposit Insurance

Authorized foreign banks

24 (1) For the purposes of paragraph 627.75(a) of the Act, the following information is prescribed information:

Manner of disclosure

(2) Either the account agreement or a separate document must be used to disclose the information that must be disclosed under paragraph 627.75(a) of the Act.

Financial Instruments and Notes

Agreement by telephone

25 For the purposes of subparagraph 627.55(2)(a)(ii) of the Act, the following information is prescribed information in relation to a deposit-type instrument:

Availability of information

26 For the purposes of section 627.77 of the Act, the following information is prescribed information:

Issuance of principal-protected note

27 For the purposes of paragraph 627.78(1)(k) of the Act, the following information is prescribed information in relation to a principal-protected note:

Synopsis — principal-protected note

28 If an agreement referred to in subsection 627.78(1) of the Act is an agreement that is in relation to a principal-protected note and is entered into in person or by telephone, the institution must ensure that a synopsis of the information that must be disclosed under that subsection is disclosed orally by a person who is knowledgeable about the terms and conditions of the note.

New instrument issued without further agreement

29 For the purposes of subsection 627.78(2) of the Act, the information referred to in subsection 627.78(1) of the Act and section 25 of these Regulations is also prescribed information.

Advertisements

30 For the purposes of paragraph 627.87(1)(c) of the Act, the following information is prescribed information:

Credit Agreements
General

Non-application — section 627.89 of Act

31 Section 627.89 of the Act does not apply in respect of a credit agreement that is entered into under

APR

32 The APR for a credit agreement is the annual interest rate if the only cost of borrowing is interest.

Disclosure statement

33 (1) Information that must be disclosed under section 627.89 of the Act must be provided in a disclosure statement that

Part of credit agreement

(2) If the disclosure statement is part of a credit agreement for a loan, line of credit or credit card, then the disclosure statement must be set out in a consolidated manner in a single location and the information box required under subsection 627.57(1) of the Act must be set out at the beginning of the agreement.

Separate document

(3) If the disclosure statement is set out in a separate document then the information box must be set out at the beginning of the statement.

Repetition of numbers

(4) Numbers that are set out in the information box — including numbers that refer to an interest rate, a period, a date or a dollar amount — are not required to be repeated in the disclosure statement but may instead be referenced in it.

Assumptions and estimates

(5) Information in the disclosure statement may be based on an assumption or estimate if the assumption or estimate is reasonable and the information

Time of initial disclosure

34 The initial disclosure statement for a credit agreement other than a credit agreement for a loan secured by a mortgage on real property must be provided on or before the earlier of

Initial disclosure — optional services

35 (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to optional services, including insurance services, that are offered on an ongoing basis:

Provincial laws

(2) For greater certainty, this section is subject to any provincial laws that apply to the cancellation of the agreement.

Disclosure to two or more persons

36 (1) Subject to subsections (2) and (3), if a credit agreement is between an institution and two or more natural persons, then the institution must disclose the information that must be disclosed under section 627.89 of the Act to all of those persons.

Group disclosure — unanimity

(2) If all of the persons have consented, orally or in writing, in paper or electronic form, to the disclosure of the information to one of the persons on their behalf, the institution must disclose the information to that person.

Group disclosure — no unanimity

(3) If two or more but not all of the persons have consented, orally or in writing, in paper or electronic form, to the disclosure of the information on their behalf to one of the consenting persons, the institution may disclose the information to that person so long as it also discloses the information to each person that did not consent.

Confirmation of consent

(4) If the consent referred to in subsection (2) or (3) is given orally by a person, the institution must provide confirmation of that consent to the person in writing, in paper or electronic form.

Amendments

37 (1) For the purposes of paragraph 627.89(5)(a) of the Act, an amendment to the terms or conditions of a credit agreement that changes any information that was disclosed in accordance with subsection 627.89(1) of the Act in the initial disclosure statement is a prescribed amendment.

Information

(2) For the purposes of paragraph 627.89(5)(b) of the Act, any information that is required to update the initial disclosure statement as a result of a change referred to in subsection (1) is prescribed information.

Time of disclosure

(3) The prescribed amendment and any prescribed information must be disclosed in writing not later than 30 days after the day on which the amendment is made.

Loans

Information box — fixed interest loan for fixed amount

38 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information in relation to a fixed interest loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

Information box — variable interest loan

39 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information in relation to a variable interest loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

Initial disclosure — fixed interest rate loan

40 (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to a fixed interest rate loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

Subsequent disclosure

(2) If the missing of a scheduled instalment payment or the imposition of a default charge for a missed scheduled instalment payment increases the outstanding balance of the loan with the result that each subsequently scheduled instalment payment does not cover the interest accrued during the period for which it was scheduled, then, for the purposes of subsection 627.89(4) of the Act, a description of this situation and its consequences is prescribed information.

Time and manner of disclosure

(3) The prescribed information referred to in subsection (2) must be disclosed in a statement that is provided not later than 30 days after the day on which the payment is missed or the default charge is imposed.

Initial disclosure — variable interest loan

41 (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to a variable interest rate loan for a fixed amount that is to be repaid on a fixed future date or by instalment payments:

Subsequent disclosure — public index

(2) If the variable interest rate for the loan is determined by adding or subtracting a fixed percentage interest rate to or from a public index that is a variable rate, then, for the purposes of subsection 627.89(4) of the Act, the following information is prescribed information:

Frequency and manner of disclosure

(3) The prescribed information referred to in subsection (2) must be disclosed in a statement that is provided at least once every 12 months.

Subsequent disclosure — other method

(4) If the variable interest rate for the loan is determined by a method other than the one referred to in subsection (2), then, for the purposes of subsection 627.89(4) of the Act, the following information is prescribed information:

Time and manner of disclosure

(5) The prescribed information referred to in subsection (4) must be disclosed in a statement that is provided not later than 30 days after the day on which the institution increases the annual interest rate by more than 1% above the most recently disclosed rate.

Amendments — loan for fixed amount

42 (1) For the purposes of paragraph 627.89(5)(a) of the Act, an amendment to a schedule for instalment payments for a loan for a fixed amount is a prescribed amendment.

Information

(2) For the purposes of paragraph 627.89(5)(b) of the Act, the amended schedule as well as any increase in the total amount to be paid or in the cost of borrowing is prescribed information.

Time of disclosure

(3) The prescribed amendment and the prescribed information must be disclosed in writing not later than 30 days after the day on which the amendment is made.

Mortgages

43 Sections 44 to 46 apply in respect of a credit agreement for a loan secured by a mortgage on real property.

Time of initial disclosure

44 (1) The initial disclosure statement for a credit agreement must be provided on or before the earlier of

Exception

(2) Paragraph (1)(b) does not apply if

Renewal

45 (1) For the purposes of subsection 627.89(6) of the Act, the following information is prescribed information in relation to a credit agreement that will be renewed on a specified date:

Time of disclosure

(2) The prescribed information must be disclosed by providing a disclosure statement at least 21 days before the specified date.

Non-renewal

46 (1) If an institution does not intend to renew a credit agreement after its term ends, then, for the purposes of subsection 627.89(6) of the Act, that fact is prescribed information.

Time of disclosure

(2) The fact must be disclosed at least 21 days before the end of the term.

Calculating borrowing costs

47 (1) For the purposes of section 627.9 of the Act, the following formula is, subject to subsections (3) and (4), the prescribed manner for calculating the cost of borrowing for a loan other than a loan obtained through the use of a credit card or line of credit:

APR = (C/(T × P)) × 100
where
APR
is the annual percentage rate cost of borrowing;
C
is an amount that represents the cost of borrowing within the meaning of section 48 of these Regulations over the term of the loan;
T
is the term of the loan in years, expressed to at least two decimal points of significance; and
P
is the average of the principal of the loan outstanding at the end of each period for the calculation of interest under the credit agreement, before subtracting any payment that is due at that time.

Calculation rules

(2) The following rules apply in respect of the calculation:

Variable interest rate

(3) If the annual interest rate underlying the calculation is variable over the period of the loan, that annual interest rate must be set as the annual interest rate that applies on the day that the calculation is made.

No instalment payments

(4) If there are no instalment payments under the agreement, then the APR must be calculated on the basis that the outstanding principal is to be repaid in one lump sum at the end of the term of the loan.

Charges included in cost of borrowing

48 (1) Subject to subsection (2), the cost of borrowing for a loan under a credit agreement, other than a loan obtained through the use of a credit card or line of credit, consists of all the costs of borrowing under the loan over its term, in particular the interest or discount that applies to the loan, and includes the following charges:

Charges not included in cost of borrowing

(2) The cost of borrowing for a loan does not include any of the following fees or charges:

Definition of borrower

(3) In this section, borrower includes a person to whom a loan is proposed to be made.

Waiver offer

49 An institution that, under an agreement for a loan for a fixed amount, offers to waive a payment without waiving the accrual of interest during the period covered by the payment must, in a prominent manner, disclose in the offer that interest will continue to accrue during that period if the offer is accepted.

Advertisements

50 (1) For the purposes of section 627.91 of the Act, a representation of the interest rate, amount of any payment or amount of any non-interest charge in relation to a loan involving a fixed amount of credit is a prescribed representation.

Information

(2) For the purposes of section 627.91 of the Act, the APR and the term of the loan are prescribed information.

Use of examples

(3) If the APR or the term of the loan is not the same for all loans to which the advertisement relates, its disclosure must be based on an example of a loan that fairly depicts all those loans and is identified as a representative example of them.

Presentation of APR

(4) For the purposes of section 627.63 of the Act, the APR must be presented at least as prominently as the prescribed representation and in the same manner, whether visually or aurally, or both.

Advertisements — transactions financed by institution

51 (1) If an institution finances a transaction depicted in an advertisement that involves a representation, express or implied, that a period of a loan is free of any interest charges, the institution must ensure that the advertisement discloses whether or not interest, due after the period, accrues during the period.

Presentation of accrual of interest

(2) The institution must ensure that the disclosure of whether or not interest, due after the period, accrues during the period is presented prominently and, in relation to an express representation, is presented equally as prominently as the representation.

Disclosure of conditions

(3) If interest does not accrue during the period, the institution must also ensure that the advertisement discloses any conditions that apply to the forgiving of the accrued interest and the APR, or the annual interest rate in the case of credit cards or lines of credit, for a period when those conditions are not met.

Lines of Credit

Information box

52 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information for a line of credit:

Non-application — paragraph 627.89(1)(a) of Act

53 Paragraph 627.89(1)(a) of the Act does not apply in respect of a line of credit.

Initial disclosure

54 (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to a line of credit:

Subsequent disclosure of credit limit

(2) If the initial credit limit is not known on the day on which the initial disclosure statement is provided, then, for the purposes of subsection 627.89(4) of the Act, the credit limit is prescribed information.

Manner of disclosure

(3) The prescribed information referred to in subsection (2) must be disclosed in

Subsequent disclosure

55 (1) For the purposes of subsection 627.89(4) of the Act, the following information is prescribed information in relation to a line of credit:

Frequency of disclosure

(2) Subject to subsections (3) and (4), the prescribed information must be disclosed in a disclosure statement that is provided at least once a month.

No statement required

(3) The disclosure statement need not be provided for a period in which there are no advances or payments and

Quarterly statement

(4) The disclosure statement may be provided once in a three-month period, either in respect of that period or the last month of it, if, during that period,

Waiver offer

56 An institution that, under a credit agreement for a line of credit, offers to waive a payment must, in a prominent manner, disclose in the offer whether interest will continue to accrue during any period covered by the offer if it is accepted.

Advertisements

57 (1) For the purposes of section 627.91 of the Act, a representation of the annual interest rate, amount of any payment or amount of any non-interest charge in relation to a loan involving a line of credit is a prescribed representation.

Information

(2) For the purposes of section 627.91 of the Act, the annual interest rate on the date of the advertisement and any initial or periodic non-interest charges are prescribed information.

Presentation of information

(3) For the purposes of section 627.63 of the Act, the prescribed information must be presented at least as prominently as the prescribed representation and in the same manner, whether visually or aurally, or both.

Credit Cards

Agreement by telephone

58 For the purposes of subparagraph 627.55(2)(a)(ii) of the Act, the information referred to in subsection 65(1) of these Regulations is prescribed information in relation to an application form for a credit card.

Information box — application form

59 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information in relation to an application form for a credit card:

Information box — agreement

60 For the purposes of subsection 627.57(1) of the Act, the following information is prescribed information in relation to a credit card:

Solicitation of applications

61 If an institution that issues credit cards solicits applications for them in person, by mail, by telephone or by any electronic means, the institution must disclose the information referred to in subsection 65(1) at the time of solicitation.

Initial disclosure statement

62 If the initial disclosure statement for a credit card is part of the application for its issuance, then the initial disclosure statement must be set out in a consolidated manner in a single location and the information box required under subsection 627.57(1) of the Act must be set out at the beginning of the application.

Non-application — paragraph 627.89(1)(a) of Act

63 Paragraph 627.89(1)(a) of the Act does not apply in respect of a credit card.

Initial disclosure

64 (1) For the purposes of paragraph 627.89(1)(e) of the Act, the following information is prescribed information in relation to a credit card:

Subsequent disclosure of credit limit

(2) If the initial credit limit is not known on the day on which the initial disclosure statement is provided, then, for the purposes of subsection 627.89(4) of the Act, the credit limit is prescribed information.

Manner of disclosure

(3) The prescribed information referred to in subsection (2) must be disclosed in

Application forms

65 (1) For the purposes of subparagraph 627.89(3)(a)(iv) of the Act, the following information is prescribed information in relation to an application form for a credit card:

Exception

(2) This section does not apply if the information box required under subsection 627.57(1) of the Act is included in the application form or in the related document prepared by the institution for the issuance of the credit card.

Subsequent disclosure

66 (1) For the purposes of subsection 627.89(4) of the Act, the following information is prescribed information in relation to a credit card:

Frequency of disclosure

(2) Subject to subsections (4) and (5), the prescribed information must be disclosed as a statement that is provided at least once a month.

No estimate required

(3) The estimate referred to in paragraph (1)(e) is not required to be provided if the person is required to pay the outstanding balance in full on receiving a statement of account.

No statement required

(4) For the purposes of subsection 627.34(1) of the Act, the statement need not be provided for a period during which there have been no advances or payments and

Quarterly statement

(5) For the purposes of subsection 627.34(1) of the Act, the statement may be provided once in a three-month period, either in respect of that period or in respect of the last month of it, if, during that period,

Amendments

67 (1) For the purposes of paragraph 627.89(5)(a) of the Act, an amendment to the terms or conditions of a credit agreement for a credit card that changes any information that was disclosed in accordance with subsection 627.89(1) of the Act in the initial disclosure statement is a prescribed amendment. This section does not, however, apply in respect of an amendment referred to in subsection 68(1) of these Regulations or a change in a variable interest rate referred to in paragraph 65(1)(b) of these Regulations as a result of a change in the public index referred to in that paragraph.

Information

(2) For the purposes of paragraph 627.89(5)(b) of the Act, any information that is required to update the initial disclosure statement as a result of an amendment referred to in subsection (1) is prescribed information.

Time of disclosure

(3) Despite subsection 37(3), the prescribed amendment and any prescribed information must be disclosed in writing 30 days or more before the amendment takes effect.

Other amendments

68 (1) For the purposes of paragraph 627.89(5)(a) of the Act, the following amendments are prescribed amendments in relation to a credit card:

Information

(2) For the purposes of paragraph 627.89(5)(b) of the Act, any information that is required to update the initial disclosure statement as a result of a prescribed amendment is prescribed information.

Time of disclosure

(3) Despite subsection 37(3), a prescribed amendment and the prescribed information must be disclosed not later than the day on which the first subsequent periodic disclosure statement is provided after the amendment is made.

Waiver offer

69 An institution that, under a credit agreement for a credit card, offers to waive a payment must, in a prominent manner, disclose in the offer whether interest will continue to accrue during any period covered by the offer if it is accepted.

Advertisements

70 (1) For the purposes of section 627.91 of the Act, a representation of the annual interest rate, amount of any payment or amount of any non-interest charge in relation to a credit card is a prescribed representation.

Information

(2) For the purposes of section 627.91 of the Act, the annual interest rate on the date of the advertisement and any initial or periodic non-interest charges are prescribed information.

Presentation of information

(3) For the purposes of section 627.63 of the Act, the prescribed information must be presented at least as prominently as the prescribed representation and in the same manner, whether visually or aurally, or both.

Prepaid Payment Products

Agreement by telephone

71 For the purposes of subparagraph 627.55(2)(a)(i) of the Act, the information referred to in paragraphs 627.92(1)(a) and (d) to (h) of the Act is prescribed information in relation to the issuance of a prepaid payment product.

Information box

72 (1) For the purposes of subsection 627.57(1) of the Act, the information referred to in paragraph 627.92(1)(f) of the Act is prescribed information in relation to the issuance of a prepaid payment product.

Exterior packaging

(2) If the prepaid payment product has exterior packaging, the institution must ensure that the information box referred to in subsection 627.57(1) of the Act appears prominently on the exterior packaging.

Issuance

73 For the purposes of paragraph 627.92(1)(j) of the Act, the following information is prescribed information:

Mortgage Insurance
Coverage and Business Arrangements

Coverage and calculation of charges

74 For the purposes of subsection 627.992(1) of the Act, the following information is prescribed information:

Business arrangements

75 (1) If an institution enters into an arrangement with an insurer to receive payments or benefits from the insurer and the insurer also provides the institution with insurance, then, for the purposes of subsection 627.992(1) of the Act, information that relates to all of the institution's business arrangements with the insurer in respect of that insurance is prescribed information.

Mandatory contents

(2) The prescribed information must include

Manner of disclosure

(3) The prescribed information must be disclosed in a single document.

Exception

(4) Subsection (1) does not apply in respect of a business arrangement entered into by the institution to provide the insurer with products and services that are offered by the institution to its customers and to the public in the normal course of business.

Payments and Benefits

Receipt on per residential mortgage basis

76 If an institution receives payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations on a per residential mortgage basis, then, for the purposes of subsection 627.992(1) of the Act, that fact is prescribed information.

Amount by activity — other basis

77 If, on the first day of a fiscal quarter, an institution has received, in any of the first four fiscal quarters of the preceding five fiscal quarters, payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations on a basis other than that referred to in section 76 of these Regulations, then, for the purposes of subsection 627.992(1) of the Act and in relation to each type of activity that is the subject of the payments or benefits, the total amount, expressed in dollars, of the payments or benefits received from the insurer in those first four fiscal quarters is prescribed information.

Expected amount by activity — other basis

78 If, on the first day of a fiscal quarter, an institution has not received, in any of the first four fiscal quarters of the preceding five fiscal quarters, any payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations but the institution expects to receive them from an insurer in that fiscal quarter, or in any of the three following fiscal quarters, on a basis other than that referred to in section 76 of these Regulations, then, for the purposes of subsection 627.992(1) of the Act and in relation to each type of activity that is the subject of the payments or benefits, the total amount, expressed in dollars, of the payments or benefits that the institution expects to receive from that insurer in that fiscal quarter and the three following fiscal quarters is prescribed information.

Manner of disclosure

79 Information that must be disclosed under subsection 627.992(2) of the Act but is not prescribed information must be disclosed in a document that is separate from other documents provided to the person in relation to the agreement.

Amount by activity — per residential mortgage basis

80 If an institution receives payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations on a per residential mortgage basis, then, for the purposes of subsection 627.992(2) of the Act and in relation to each type of activity that is the subject of the payments or benefits, the amount of each of the payments or benefits, expressed in dollars, is prescribed information.

Amount charged — other basis

81 If, on the first day of a fiscal quarter, an institution has, in any of the first four fiscal quarters of the preceding five fiscal quarters, received payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations on a basis other than that referred to in section 76 of these Regulations, then, for the purposes of subsection 627.992(2) of the Act, the amount, expressed in dollars, that is determined by multiplying the amount that the institution charges the person for insurance by each of the percentages of the total amount paid to the insurer by the institution in respect of policies and guarantees in those first four fiscal quarters is prescribed information.

Expected amount charged — other basis

82 If, on the first day of a fiscal quarter, an institution has not received, in any of the first four fiscal quarters of the preceding five fiscal quarters, any payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations, but the institution expects to receive them from an insurer in that fiscal quarter, or in any of the three following fiscal quarters, on a basis other than that referred to in section 76 of these Regulations, then, for the purposes of subsection 627.992(2) of the Act, the amount, expressed in dollars, that is determined by multiplying the amount that the institution charges the person for insurance by each of the percentages of the total amount expected to be paid to the insurer by the institution in respect of the policies and guarantees in that fiscal quarter and the three following fiscal quarters is prescribed information.

Manner of disclosure

83 The prescribed information referred to in sections 80 to 82 must be disclosed in a document that is separate from other documents provided to the person in relation to the agreement.

Percentage of amount charged — per residential mortgage basis

84 If an institution receives payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations on a per residential mortgage basis, then, for the purposes of subsection 627.992(2) of the Act, the amount of each of those payments or benefits expressed as a percentage of the amount that the institution charges the person for insurance is prescribed information.

Amounts paid by insurer — other basis

85 If, on the first day of a fiscal quarter, an institution has received, in any of the first four fiscal quarters of the preceding five fiscal quarters, payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations on a basis other than that referred to in section 76 of these Regulations, then, for the purposes of subsection 627.992(2) of the Act and in relation to each type of activity that is the subject of the payments or benefits, the amount of each of the payments or benefits, expressed both in dollars and as a percentage of the total amount paid to the insurer by the institution in respect of policies and guarantees in those first four fiscal quarters, is prescribed information.

Percentage of expected amount — other basis

86 If, on the first day of a fiscal quarter, an institution has not received, in any of the first four fiscal quarters of the preceding five fiscal quarters, any payments or benefits in respect of insurance from an insurer under an arrangement referred to in subsection 75(1) of these Regulations, but the institution expects to receive them from an insurer in that fiscal quarter, or in any of the three following fiscal quarters, on a basis other than that referred to in section 76 of these Regulations, then, for the purposes of subsection 627.992(2) of the Act and in relation to each type of activity that is the subject of the payments or benefits, the total amount of the payments or benefits that the institution expects to receive from that insurer in that fiscal quarter and the three following fiscal quarters, expressed as a percentage of the total amount expected to be paid to the insurer by the institution in respect of policies and guarantees in that fiscal quarter and the three following fiscal quarters, is prescribed information.

Manner of disclosure

87 The prescribed information referred to in sections 84 to 86 must be disclosed in a document that is separate from other documents provided to the person in relation to the agreement.

Amounts not included

88 For greater certainty, the payments referred to in sections 76 to 78, 80 to 82 and 84 to 86 do not include any payment received by the institution in respect of a claim made by the institution under the insurance as a result of a default on the residential mortgage that is the subject of the insurance.

Public Notices

Notice of Branch Closure

Notice given by mail

89 If a notice referred to in section 627.993 of the Act is sent by mail, it is deemed to have been given on the fifth business day after the postmark date.

Notice to Commissioner

90 For the purposes of subsection 627.993(3) of the Act, the following information is prescribed information in relation to a notice referred to in paragraph 627.993(1)(a) of the Act:

Other notices

91 For the purposes of subsection 627.993(3) of the Act, the following information is prescribed information in relation to a notice referred to in paragraph 627.993(1)(b) or (c) of the Act:

Non-application — section 627.993 of Act

92 Section 627.993 of the Act does not apply in any of the following circumstances:

Exemptions

93 For the purposes of section 627.994 of the Act, the following circumstances are the prescribed circumstances:

Public Accountability Statements

Prescribed affiliates

94 For the purposes of subparagraph 627.996(1)(a)(i) of the Act, the following affiliates of a bank are the prescribed affiliates:

Content of statement

95 (1) For the purposes of subparagraph 627.996(1)(a)(i) of the Act and subject to sections 96 to 98 of these Regulations, the following information is prescribed information:

Definition of community development

(2) For the purposes of subparagraphs (1)(c)(i) and (ii), community development means the social, cultural, economic or environmental enrichment of a community.

Exception — new initiatives and technical assistance programs

96 (1) The information referred to in subparagraph 95(1)(c)(v) of these Regulations is not prescribed information for the purposes of subparagraph 627.996(1)(a)(i) of the Act in respect of a prescribed affiliate that is an insurance company that did not undertake any new initiatives or technical assistance programs referred to in subparagraph 95(1)(c)(v) of these Regulations during the financial year.

Exception — debt financing

(2) The information referred to in paragraph 95(1)(e) of these Regulations is not prescribed information for the purposes of subparagraph 627.996(1)(a)(i) of the Act in respect of a prescribed affiliate that is an insurance company that did not authorize money to be made available by way of debt financing to firms in Canada during the financial year.

Exception — identification of firm

97 If a firm could be identified by breaking down the amount referred to in paragraph 95(1)(e) within the ranges referred to in subparagraphs 95(1)(e)(vi) and (vii), then the report referred to in paragraph 95(1)(e) is not required to include that information.

Exception — identification of firm by province

98 If a firm could be identified by breaking down the amount referred to in paragraph 95(1)(e) within the ranges referred to in subparagraphs 95(1)(e)(i) to (v) for a province, then the report referred to in paragraph 95(1)(e) may set out that information with the information set out for another province provided that the report indicates that there is a change in the breakdown for the purposes of this section and identifies the provinces in question.

PART 3

Consequential Amendments, Repeals and Coming into Force

Consequential Amendments

Public Accountability Statements (Banks, Insurance Companies, Trust and Loan Companies) Regulations

99 The title of the Public Accountability Statements (Banks, Insurance Companies, Trust and Loan Companies) Regulationsfootnote 34 is replaced by the following:

Public Accountability Statements (Insurance Companies and Trust and Loan Companies) Regulations

100 (1) Paragraph (a) of the definition declarant in section 1 of the Regulations is repealed.

(2) Paragraph (a) of the definition public accountability statement in section 1 of the Regulations is repealed.

101 (1) The portion of subsection 2(1) of the Regulations before paragraph (a) is replaced by the following:

Affiliates of declarant

2 (1) For the purposes of subsection 489.1(1) of the Insurance Companies Act and subsection 444.2(1) of the Trust and Loan Companies Act, the affiliates of a declarant in respect of which a public accountability statement is required to be published are

(2) Subsection 2(2) of the Regulations is replaced by the following:

Exception

(2) For the purposes of subsection 489.1(1) of the Insurance Companies Act and subsection 444.2(1) of the Trust and Loan Companies Act, the affiliates of a declarant in respect of which a public accountability statement is not required to be published in a given period are the entities referred to in paragraphs (1)(a) and (b) in respect of which a public accountability statement is published by another declarant for that period.

Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

102 Subsection 105(6) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulationsfootnote 35 is replaced by the following:

(6) In the case of a retail deposit account referred to in subsection 627.17(1) of the Bank Act, if a person or entity cannot verify a person's identity in accordance with one of paragraphs (1)(a) to (e) of this section, they are deemed to comply with subsection (1) if the person who requests that the account be opened meets the conditions set out in subsections 627.17(1) and (3) of the Bank Act.

103 Paragraph 108(g) of the Regulations is replaced by the following:

Principal Protected Notes Regulations

104 Paragraphs (a) and (b) of the definition institution in section 1 of the Principal Protected Notes Regulationsfootnote 36 are repealed.

Credit Business Practices (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulations

105 The title of the Credit Business Practices (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulationsfootnote 37 is replaced by the following:

Credit Business Practices (Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Foreign Insurance Companies) Regulations

106 Paragraphs (a) and (b) of the definition institution in section 1 of the Regulations are repealed.

107 Paragraphs 7(11)(a) and (b) of the Regulations are repealed.

Mortgage Insurance Disclosure (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Canadian Societies) Regulations

108 The title of the Mortgage Insurance Disclosure (Banks, Authorized Foreign Banks, Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Canadian Societies) Regulationsfootnote 38 is replaced by the following:

Mortgage Insurance Disclosure (Trust and Loan Companies, Retail Associations, Canadian Insurance Companies and Canadian Societies) Regulations

109 Paragraphs (a) and (b) of the definition institution in section 1 of the Regulations are repealed.

Deposit Type Instruments Regulations

110 Paragraphs (a) and (b) of the definition institution in section 1 of the Deposit Type Instruments Regulationsfootnote 39 are repealed.

111 Subsection 8(3) of the Regulations is replaced by the following:

Exception

(3) Paragraph (2)(b) does not apply to an institution to which subsection 378.2(2) of the Cooperative Credit Associations Act or subsection 413.1(2) of the Trust and Loan Companies Act applies.

Registered Products Regulations

112 (1) Paragraphs (a) and (b) of the definition institution in subsection 1(1) of the Registered Products Regulationsfootnote 40 are repealed.

(2) Subsection 1(2) of the Regulations is replaced by the following:

Definition of registered product

(2) For the purposes of section 385.131 of the Cooperative Credit Associations Act, section 434.1 of the Trust and Loan Companies Act and these Regulations, registered product means a registered education savings plan, a registered retirement savings plan, a registered retirement income fund, a registered disability savings plan or any other plan, arrangement or fund to which Division G of Part I of the Income Tax Act applies that is provided by an institution to a natural person.

113 Subsection 2(1) of the Regulations is replaced by the following:

Clear and simple language

2 (1) The information that is required to be provided by an institution under subsection 385.131(1) of the Cooperative Credit Associations Act, subsection 434.1(1) of the Trust and Loan Companies Act or these Regulations must be disclosed in language, and presented in a manner, that is clear, simple and not misleading.

114 The portion of subsection 3(1) of the Regulations before paragraph (a) is replaced by the following:

Exception

3 (1) An institution is not required to provide the information referred to in subsection 385.131(1) of the Cooperative Credit Associations Act or subsection 434.1(1) of the Trust and Loan Companies Act if

Prescribed Products Regulations

115 The portion of section 1 of the Prescribed Products Regulationsfootnote 41 before paragraph (a) is replaced by the following:

1 For the purposes of sections 385.131 and 385.241 of the Cooperative Credit Associations Act and sections 434.1 and 442.1 of the Trust and Loan Companies Act, the following products are prescribed:

Negative Option Billing Regulations

116 Paragraphs (a) and (b) of the definition institution in section 1 of the Negative Option Billing Regulationsfootnote 42 are repealed.

Access to Funds Regulations

117 Paragraphs (a) and (b) of the definition institution in section 1 of the Access to Funds Regulationsfootnote 43 are repealed.

Prepaid Payment Products Regulations

118 Paragraphs (a) and (b) of the definition institution in section 1 of the Prepaid Payment Products Regulationsfootnote 44 are repealed.

119 The portion of subsection 4(1) of the Regulations before paragraph (a) is replaced by the following:

Manner and content

4 (1) For the purposes of subsection 385.18(2) of the Cooperative Credit Associations Act, subsections 482(1.1) and 601(2) of the Insurance Companies Act and subsection 438(1.1) of the Trust and Loan Companies Act, the following information must, before a prepaid payment product is issued, be provided in any document that the issuing institution prepares for the issuance of the product, including on the product's exterior packaging, if any, and be provided in writing to any person applying to the institution for the product:

120 The portion of subsection 6(1) of the Regulations before paragraph (a) is replaced by the following:

On issuance

6 (1) For the purposes of subsection 385.18(3) of the Cooperative Credit Associations Act, subsections 482(2) and 601(3) of the Insurance Companies Act and subsection 438(2) of the Trust and Loan Companies Act, any charges for which a natural person to whom a prepaid payment product is issued becomes responsible by accepting or using the product, as well as the following information, must be disclosed in writing to that person on issuance of the product:

121 The portion of section 7 of the Regulations before paragraph (a) is replaced by the following:

On product

7 For the purposes of subsection 385.18(3) of the Cooperative Credit Associations Act, subsections 482(2) and 601(3) of the Insurance Companies Act and subsection 438(2) of the Trust and Loan Companies Act, an institution must disclose the following information by setting it out directly on the prepaid payment product or, if the product is electronic, by disclosing it electronically on the product holder's request:

Repeals

122 The following Regulations are repealed:

Coming into Force

Immediately before June 30, 2022

123 (1) Sections 99 to 122 come into force immediately before the coming into force of section 329 of the Budget Implementation Act, 2018, No. 2, chapter 27 of the Statutes of Canada 2018.

June 30, 2022

(2) Sections 1 to 98 come into force on June 30, 2022.

SCHEDULE

(Section 14)

Prescribed Debt Collection Practices
Item Debt Collection Practice
1 An institution that communicates with a debtor in order to collect payment of a debt from the debtor must inform them of the following information:
  • (a) the details of the debt, such as the amount owed and the type of debt; and
  • (b) the identity of, or a unique identifier for, any person who is attempting to collect the payment on behalf of the institution and their relationship with the institution.
2 (1) Except for the sole purpose of obtaining a debtor's address or telephone number, an institution may not contact or attempt to contact any member of the debtor's family or household or any relative, neighbour, friend or acquaintance of the debtor unless
  • (a) that person has guaranteed to pay the debt and is being contacted in relation to that guarantee; or
  • (b) the debtor has given their express consent.
(2) If the consent referred to in paragraph (1)(b) is given orally by the debtor, the institution must provide confirmation of that consent to the debtor in writing, in paper or electronic form.
3 Unless otherwise authorized in writing by the debtor, an institution may contact a debtor's employer solely for the purpose of confirming that the debtor is employed, the nature of their employment and their business title and business address.
4 An institution may not contact a debtor at the debtor's place of employment unless
  • (a) the institution does not have the home address or home telephone number of the debtor;
  • (b) attempts by the institution to contact the debtor at their home telephone number have failed; or
  • (c) the institution obtains written authorization from the debtor to do so.
5 (1) Except with the written consent of the debtor, an institution may not contact a debtor, any member of the debtor's family or household, any relative, neighbour, friend or acquaintance of the debtor or the debtor's employer or guarantor
  • (a) on a Sunday, except between the hours of 1:00 p.m. and 5:00 p.m. local time for the person being contacted;
  • (b) on any other holiday; or
  • (c) on any other day, except between the hours of 7:00 a.m. and 9:00 p.m. local time for the person being contacted.
(2) Except if the debtor or any other person referred to in subsection (1) has provided a cellular telephone number as a contact number, an institution may not knowingly communicate or attempt to communicate with the debtor or that person for the purpose of collecting, negotiating or demanding payment of a debt by a means that renders the charges or costs incurred for the communication payable by the debtor or that person, as the case may be.
6 An institution that has communicated with a debtor in respect of the collection of a debt may not communicate with the debtor again in the course of that collection
  • (a) by a means other than in writing, if the debtor makes a written request by registered mail to the institution to communicate with the debtor only in writing in that regard and provides an address at which they may be contacted;
  • (b) by a means other than through the debtor's legal advisor, if the debtor makes a written request to the institution to communicate with the debtor in that regard only through the debtor's legal advisor and provides a telephone number and an address for the legal advisor; or
  • (c) without the debtor's consent, if the debtor notifies the institution by registered mail that the debt is in dispute and that they intend to take the matter before a dispute resolution body or that they are prepared for the institution to take the matter to court.
7 An institution may not misrepresent the purpose of a communication in respect of the collection of a debt with any person or give, directly or indirectly, by implication or otherwise, any false or misleading information in the course of that communication.
8 Despite any agreement to the contrary between a debtor and an institution, any charges made or incurred by the institution in collecting a debt, other than charges referred to in section 627.3 of the Act, are not considered to be a part of the amount owing by the debtor and may not be recovered from the debtor by the institution.
9 An institution may not collect or attempt to collect payment in respect of a debt from any person who is not liable for the debt.
10 An institution may not directly or indirectly threaten or state an intention to proceed with any legal action if it does not actually intend to do so.
11 An institution may not, for the purpose of attempting to collect a debt, use any document that falsely purports to originate from any court within or outside Canada.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The Government introduced, in Budget Implementation Act, 2018, No. 2, legislative amendments to the Bank Act and the Financial Consumer Agency of Canada Act to strengthen the Financial Consumer Agency of Canada's (FCAC) mandate and powers, and to introduce the new Financial Consumer Protection Framework (the Framework) to further advance consumers' rights and interests when dealing with their banks. The Financial Consumer Protection Framework Regulations (the Regulations) consolidate and streamline the existing regulatory elements, to create a comprehensive group of financial consumer protection rules in one set of regulations, and introduce new regulatory requirements to further empower and protect bank consumers.

Description: These Regulations intend to support bank consumers by introducing five new provisions to help support the legislative Framework requirements that will

  • raise the prescribed maximum amount of a Government of Canada cheque that a bank must cash for a consumer free of charge;
  • prescribe the number of days in which a bank must resolve consumer complaints;
  • clarify the scope of the legislative Framework so that it applies as intended;
  • update disclosure requirements regarding liability for unauthorized credit card transactions; and
  • set new disclosure requirements for deposit type instruments at renewal.

The Regulations also consolidate existing consumer protection provisions from 23 sets of regulations that have not been incorporated into the legislative Framework in the Bank Act, and repeal those provisions that have been incorporated into the legislative Framework.

Rationale: The Regulations will result in an estimated $19,419,225 (present value [PV]) in costs over a 10-year period in 2021 dollars. The Regulations will benefit Canadians by supporting the coming into force of the legislative Framework, which will strengthen bank practices to improve outcomes for consumers, and further empower and protect consumers in their dealings with their banks. When consumers are further empowered and protected, they may experience benefits such as more satisfaction with financial institutions, greater confidence in the financial system, and reduced stress when making financial decisions.

Stakeholders, including consumer groups, industry, and provincial and territorial governments, were consulted from winter 2019 until summer 2020. The majority of the requirements result in no substantive change to the consumer protection regulations, and the few new regulatory requirements are relatively minor in nature and have received no significant stakeholder opposition.

Issues

The Government introduced, in Budget Implementation Act, 2018, No. 2, legislative amendments to the Bank Act and the Financial Consumer Agency of Canada Act to strengthen the Financial Consumer Agency of Canada's (FCAC) mandate and powers, and to introduce the new Financial Consumer Protection Framework (the Framework) to further advance consumers' rights and interests when dealing with their banks.

To create the new legislative Framework, key elements of the current legislative and regulatory consumer protection rules were incorporated into a new Bank Act chapter, along with over 60 new or enhanced measures.

The new legislative Framework requires supporting regulations in order to be brought into force, as a number of regulatory requirements were moved into legislation, and certain new legislative provisions require supporting regulations to be fully operational.

The Financial Consumer Protection Framework Regulations (the Regulations) consolidate and streamline the existing regulatory elements supporting the new legislative Framework, to create a comprehensive group of financial consumer protection rules in one set of regulations.

The Regulations also include several new requirements necessary to support the new Framework, such as

Background

Currently, the Bank Act and 23 sets of supporting regulations prescribe the consumer protection rules that federally regulated banks and authorized foreign banks must follow. These rules help to ensure that banks engage in responsible business conduct, provide complaints handling services to consumers, provide access to basic banking services, and disclose key product information to consumers.

In 2018, two reports by the FCAC highlighted key areas where the legislation and regulations could better protect bank consumers and further strengthen regulatory oversight. The first was an assessment of best practices in provincial and territorial consumer protection regimes in the Report on Best Practices in Financial Consumer Protection. The second was a review of bank sales practices in the Domestic Bank Retail Sales Practices Review.

In addition, the Department of Finance consulted over 100 representatives from provinces and territories, consumer groups, banks and external complaints bodies to seek their views on legislative proposals to improve protection for bank consumers. The FCAC and the Department of Finance also met with regulators and government officials from the Financial Conduct Authority in the United Kingdom and the Bank of Ireland to learn more about international approaches to financial consumer protection.

To address the issues raised in the FCAC reports, the Government introduced legislative amendments to the Bank Act and the Financial Consumer Agency of Canada Act to strengthen the FCAC's mandate and powers, and to introduce the new legislative Framework.

The new legislative Framework in the Bank Act incorporates key elements of the financial consumer protection rules in the current legislation and regulations, and introduces over 60 new or enhanced measures.

The new legislative Framework strengthens outcomes for consumers by requiring banks to improve internal business practices, including by

The measures also further empower and protect consumers, including by

The consolidation and streamlining of the existing legislative and regulatory requirements into the new legislative Framework serve to uphold the existing requirements on banks. These requirements help to ensure that banks engage in responsible business conduct, provide complaints handling services to consumers, provide access to basic banking services, and disclose key product information to consumers.

In some cases where the new legislative Framework incorporates elements of the existing regulations, it further enhances these requirements. For example, product-specific cancellation requirements in the current regulations were enhanced in the legislation to create a new general cancellation requirement to apply to all bank products and services. These types of legislative amendments enhance the ability of the new legislative Framework to adapt to changing technology and the ongoing innovation of bank products and services. As another example, the legislative Framework incorporates the existing regulatory requirement that prohibits credit limit increases on a credit card account without a consumers' express consent. This requirement now also applies to a line of credit. While express consent is required for any increases to the maximum credit available to a consumer, any increase to available credit due to repayment of a loan, such as for a line of credit secured by real property or a home equity line of credit, are not considered a change to the credit limit.

In certain instances, the legislative Framework introduces new provisions that require supporting regulations. For example, the legislative Framework requires banks to deal with consumer complaints within a certain number of days, with the number of days to be prescribed in the Regulations. This will help improve the complaints handling process, which was recently the subject of a review by the FCAC. The FCAC's findings demonstrated that while banks resolve the majority of complaints quickly and to the satisfaction of consumers, they face delays when a complaint is escalated beyond the first point of contact. Currently, there is no regulatory requirement on banks to deal with complaints in a specific number of days. As a result, this change will set a clear standard on banks, which could help improve consumer outcomes and satisfaction with the complaints handling process.

In other cases, the new legislative Framework incorporates elements of the existing regulations, without any changes. For example, disclosure requirements for prepaid payment products provide that banks must disclose, for example, all charges that may be imposed on a consumer. No changes were made to this requirement.

Objective

The Regulations are required to support the coming into force of the new legislative Framework. The Regulations will streamline and consolidate requirements on banks and authorized foreign banks that are currently found in 23 different existing regulations. This will provide a more consistent and coherent set of rules that is easier for stakeholders, including consumers, to understand and use.

In addition, the Regulations support bank consumers by introducing new requirements that will

Description

New regulatory provisions

The Regulations contain five new provisions to help support the legislative Framework. Details are as follows:

Provision to support access to basic banking services

The legislative Framework requires banks to cash, free of charge, Government of Canada cheques that are presented by a consumer, regardless of whether they have an account with the bank. The consumer must meet the minimum identification requirements as set out in the legislation, and the maximum amount of the cheque that can be cashed is prescribed in the Regulations.

To keep pace with rising Government of Canada benefit levels for minimum income programs (e.g. Old Age Security, Canada Pension Plan), the Regulations raise the prescribed maximum amount of a Government of Canada cheque that a bank must cash for a consumer from the current maximum of $1,500, to $1,750. This helps to ensure that individuals who rely on Government of Canada payments for their basic income are able to access the cash they need, free of charge.

Provision to support complaints handling processes

The legislative Framework requires that banks and authorized foreign banks deal with consumer complaints within a prescribed number of days. To improve the timeliness of the complaint-handling process for consumers, the Regulations require banks and authorized foreign banks to deal with consumer complaints within 56 days (8 weeks) following the day a complaint is made.

Currently, there is no regulatory requirement on banks to deal with complaints in a specific number of days, but FCAC guidelines request that banks resolve consumer complaints within 90 days from the day a complaint is escalated to an employee designated to deal with complaints. This change will set a clear standard on banks, which could help improve consumer outcomes and satisfaction with the complaints handling process.

Provision to clarify that derivatives and eligible financial contracts are out of scope

The legislative Framework includes a number of general requirements that apply to all products and services offered or sold by a bank (e.g. new requirement to ensure products are appropriate for a consumer, general cancellation rights for all products and services). In these cases, the legislative requirements may inadvertently apply to derivatives and eligible financial contracts, which are financial instruments generally used for risk management by businesses or sometimes by very wealthy individuals.

The current legislation and regulations do not capture these products, and there was no intent to include these in the new legislative Framework. The Regulations clarify the scope of the legislative Framework by expressly excluding derivatives and eligible financial contracts from “products and services.” Clarifying the scope serves to maintain status quo for these products and services.

Provisions to support the disclosure of liability for unauthorized credit card transactions

The legislative Framework modernizes the credit card liability rules to reflect changes in payments technology (i.e. use of PIN) to help ensure consumers are only held liable for unauthorized transactions where they failed to safeguard their account. The Regulations update what information is required to be disclosed to consumers regarding liability for unauthorized credit card transactions to reflect the new legislative requirements, which are the following:

Disclosure of key product information, such as the credit card liability rules, allows consumers to understand their rights and obligations, and to make informed financial decisions.

Provision to support the disclosure of the interest rate for deposit type instruments on renewal

The legislative Framework creates a new requirement for banks and authorized foreign banks to disclose the interest rate for a deposit type instrument 21 days and 5 days before renewal. The intent of this legislative provision is to ensure consumers are notified that a deposit type instrument, such as a Guaranteed Investment Certificate (GIC), is going to roll over and automatically renew. Consumers should also have access to the most up-to-date rate information that is available, so that they can consider their options in the timeframe leading up to renewal.

In order to ensure consumers can access the rate that is most up to date, the Regulations clarify that banks and authorized foreign banks can disclose this rate by directing the consumer to a website or telephone number where they can obtain the then-current rate. This notification would provide the consumer time to take any appropriate action, and would provide them with the flexibility to continue to monitor the rate which could change up until the renewal date.

Consolidation and streamlining of existing regulatory provisions

The Regulations consolidate existing consumer protection provisions from 23 sets of regulations that have not been incorporated into the new legislative Framework in the Bank Act, and repeal those provisions that have been incorporated into the new legislative Framework.

Ten sets of these regulations apply to other federally regulated financial institutions in addition to banks and authorized foreign banks (e.g. trust and loan companies). These regulations will be amended to remove any reference to banks and authorized foreign banks, and will continue to apply to other federally regulated financial institutions. Provisions in these regulations that currently apply to banks and authorized foreign banks have been consolidated in the Regulations, or are included in the new legislative Framework. These 10 sets of regulations are the following:

The other 13 sets of regulations will be repealed in full, as they apply solely to banks and authorized foreign banks. Many of their provisions have been incorporated into the legislative Framework. The remaining provisions have been consolidated into the Regulations. These 13 sets of regulations are the following:

These repeals would also address a number of issues raised by the Standing Joint Committee for the Scrutiny of Regulations, which raised concerns regarding perceived duplication of requirements pertaining to the prohibition of misleading information. The legislative Framework incorporated any references to the prohibition of misleading information that currently exist in the regulations, so all references to misleading conduct are now contained in the Bank Act.

Coming into force

The Regulations will come into force June 30, 2022.

Regulatory development

Consultation

Pre-consultations on the Regulations began in winter 2019 and continued until summer 2020. Stakeholders consulted include consumer groups; provincial and territorial governments and financial services regulators; the Canadian Bankers Association and member banks; external complaints bodies; and other federal government departments and agencies, including the FCAC. Stakeholders had multiple opportunities to discuss the Regulations and to provide input and feedback.

In these consultations, consumer groups expressed a strong interest in seeing improvements to certain financial consumer protection rules. For example, consumer groups were interested in seeing the banks' complaints handling period shortened from the existing 90-day guideline set out by the FCAC. Consumer groups requested the prescribed period of time be set to less than 60 days, to help ensure consumers obtain timely resolution of their disputes. Consumer groups expressed support for the increase to the maximum amount of a Government of Canada cheque that must be cashed by a bank free of charge, as this measure helps ensure that individuals who rely on Government of Canada programs for their income can access their funds.

Consumer groups also suggested the legislative Framework be implemented as soon as feasible, as these reforms will better empower and protect consumers in their dealings with their banks. The legislative Framework cannot be brought into force until the necessary supporting regulations are complete. Further, banks required time to make the necessary systems changes to implement the legislative Framework.

Representatives from provinces and territories and the provincial regulators were engaged and shared insights on the proposals. In some cases, provinces reiterated comments previously provided at the legislative stage. For example, some provincial representatives appreciated that the legislative Framework and the Regulations maintain key elements of the existing regulations, such as the rules on disclosing the cost of borrowing.

One province expressed concerns that since elements of the federal regulations differ from provincial requirements, this could create challenges for consumers. However, the Government of Canada has publicly stated its commitment to ensuring that consumers would continue to benefit from all provincial protections, and gain new bank-specific protections under federal law. The Regulations do not affect the provinces' ability to regulate in the area of consumer protection.

Banks provided technical input on the Regulations to facilitate alignment with business practices, and indicated a preference for the final Regulations to be developed as quickly as possible to allow time to make the necessary changes and prepare for the legislative Framework and the Regulations to come into force.

Banks also sought clarity on the scope of the legislative Framework to ensure derivatives and eligible financial contracts were not captured in the legislative Framework. They also expressed a preference for a complaints handling period longer than 60 days.

Banks also raised concerns that elements of the legislative Framework could be interpreted to apply broadly, and requested clarification regarding the application to large businesses. For example, the new general cancellation right in the legislative Framework could be read as applying to any product or service a large business receives from a bank. There was no intent to extend these rights to large businesses, who may wish to negotiate specific rights, such as cancellation rights, in the terms and conditions of their banking agreements. A legislative amendment was tabled in Parliament in spring 2021 to address this (Bill C-30).

Banks were also concerned that the new legislative Framework's credit card liability provisions could be read broadly, to apply to commercial credit cards. The term “borrower,” in this provision historically applied to borrowers who are natural persons for non-business purposes. There was no intention to change the scope of the term “borrower” to include businesses, and as such, the Regulations will not clarify the scope of the credit card liability provisions in the legislative Framework. The Department is considering what instrument could provide any further necessary clarification.

Other interested federal departments and agencies were supportive of the Regulations. Overall, there were no significant concerns with the Regulations from stakeholders.

The majority of the regulatory requirements result in no substantive policy change to the financial consumer protection regulations that banks and authorized foreign banks must currently follow. The few new regulatory amendments have received no significant stakeholder opposition.

Modern treaty obligations and Indigenous engagement and consultation

No impacts have been identified in respect of the Government's obligations in relation to Indigenous rights protected by section 35 of the Constitution Act, 1982, or its modern treaty obligations.

Instrument choice

The Regulations are required to ensure implementation of the legislative Framework. Where appropriate, other instruments will be used to support the legislative Framework.

The Regulations include measures that either form part of the existing regulatory requirements or are necessary to bring into force the new legislative Framework. For example, the legislative Framework requires banks to deal with complaints within a prescribed number of days — the number of days is included in the Regulations.

There are areas of the legislative Framework where further clarification could be helpful, and where regulations were considered and not pursued in order to allow non-regulatory measures to be pursued (e.g. FCAC guidance).

For example, banks requested that the Regulations clarify that express consent to modify or replace an existing product or service is not necessary. Upon examining this issue, it was determined there was no intent to require express consent in such cases. In addition, it was noted that consumers are protected via a Commitment on Modification or Replacement of Existing Products or Services. This is a public commitment by banks that are members of the Canadian Bankers Association, and the FCAC supervises compliance with the Commitment. This Commitment requires banks to disclose information and provide certain cancellation rights where a product is modified or replaced and a fee or charge is increased. This Commitment remains in place, complementing the new legislative Framework.

Regulatory analysis

Benefits

The Regulations will benefit Canadians by supporting the coming into force of the legislative Framework, which will strengthen bank practices to improve outcomes for consumers, and further empower and protect consumers in their dealings with their banks. When consumers are further empowered and protected, they may experience benefits such as more satisfaction with financial institutions, greater confidence in the financial system, and reduced stress when making financial decisions.

In addition, these Regulations will benefit Canadians and banks by consolidating the consumer protection requirements into a single regulation, making these requirements easier to access and understand.

Finally, the Regulations will set thresholds required for consumers to benefit from key elements of the Framework. For example,

The benefits to consumers were not monetized, as there is a lack of sufficient quantitative data regarding how consumer protection rules improve the well-being of bank consumers.

Costs

It is assumed that roughly 86 banks will be impacted by this proposal. The total incremental compliance costs imposed on the banking sector are estimated at approximately $19.4 million (in present value, 2021 CAN$) over 10 years.

These costs primarily stem from the new requirement to improve the timeliness of complaints handling, as banks must deal with consumer complaints within 56 days (8 weeks) from the day a complaint is made. Currently, FCAC guidelines request that banks resolve consumer complaints within 90 days from the day a complaint is escalated to an employee designated to deal with complaints. To determine the impact of the shorter timeline, the following assumptions were considered:

The secondary costs for banks are associated with the requirement to update the disclosure documents for credit card liability and provide information on Guaranteed Investment Certificates (GICs). In order to cost this outcome, the following assumptions were considered:

These costs were estimated by using the Treasury Board Secretariat's Regulatory Cost Calculator.

In summary, the total present value of costs to industry over 10 years are estimated to be about $19,384,503. The costs to government for implementing the changes are estimated to be about $34,722 and will be incurred in the implementation year.

Cost-benefit statement
Table 1: Monetized costs
Impacted stakeholder Description of cost Base year (2021) 2025 Final year (2030) Total (present value) Annualized value
Government Requirement for PSPC to update its indemnification rules in the event banks cash fraudulent Government of Canada cheques $21,913 $0 $0 $21,913 $3,120
Government Sharing of information and discussions in support to the update to the Payments Canada rule $12,809 $0 $0 $12,809 $1,824
Industry Requirement for banks to deal with consumer complaints within 56 days (from 90 days FCAC guidance) $2,696,024 $2,696,024 $2,696,024 $19,381,677 $2,696,024
Industry Requirement to update the disclosure documents for credit card liability and provide information on GIC rates $2,826 $0 $0 $2,826 $402
All stakeholders Total costs $2,733,572 $2,696,024 $2,696,024 $19,419,225 $2,701,370
Table 2: Summary of monetized costs and benefits
Impacts Base year Other relevant years Final year Total
(present value)		 Annualized value
Total costs $2,733,572 $2,696,024 $2,696,024 $19,419,225 $2,701,370
Total benefits $0 $0 $0 $0 $0
NET IMPACT −$2,733,572 −$2,696,024 −$2,696,024 −$19,419,225 −$2,701,370
Qualitative impacts

The Regulations will positively impact Canadians by making the complaints handling process more transparent and accountable for consumers. Consumers will have their complaints addressed by banks in a shorter period of time. In addition, the Regulations will ensure consumers receive the information they need in a timely manner regarding products and services about to be renewed or automatically renewed by requiring banks to disclose to the consumer 21 days in advance that a product is scheduled to be renewed and to send a reminder 5 days prior to the renewal date. Lastly, the Regulations will also increase the maximum amount of Government of Canada cheques that can be cashed free of charge which will allow Canadians to access funds without having to incur additional costs. These are concrete examples of measures aimed to empower and protect the consumers when dealing with their banks.

Small business lens

The small business lens does not apply, as there are no associated impacts on small businesses.

One-for-one rule

These regulatory amendments will repeal 13 titles and create one consolidated regulation.

The current Public Accountability Statements (Banks, Insurance Companies, Trust and Loan Companies) Regulations set out the various elements that need to be included in the statement. Some of these regulatory provisions are being repealed since they have now been moved into the legislative Framework.

The requirements that were once found in the Public Accountability Statements (Banks, Insurance Companies, Trust and Loan Companies) Regulations in paragraphs 3(1)(a), (b), (c), and (f), and paragraphs 5(a), (b), and (c) are now in the legislation. The requirement to publish this information within 135 days [section 4 of the Public Accountability Statements (Banks, Insurance Companies, Trust and Loan Companies) Regulations] has also been brought up into the legislative Framework.

Therefore, the one-for-one rule applies since there is a removal in administrative burden from the regulations for 11 banks. Under Element A of the rule, there is a decrease of $8,026 in annualized administrative costs or $669 per business over a 10-year period and using a discount rate of 7% (2012 CAN$). Under Element B, the proposal repeals 13 existing regulatory titles and replaces them with one new regulatory title; as a result, a net of 12 titles out is counted under the rule.

Regulatory cooperation and alignment

The legislative Framework and Regulations set out a comprehensive set of federal rules applying to banks and authorized foreign banks when they deal with their customers and the public that co-exist with provincial rules. Many provinces have established general consumer protection rules that apply to all products or contracts. Provinces and territories have been consulted on several occasions on the Regulations, including through the Consumer Measures Committee, a federal-provincial-territorial forum that works on harmonizing laws, regulations and practices, as well as raising public awareness on consumer protection issues.

The Regulations are complementary to provincial consumer protection laws that generally apply to all parts of the economy. Consumers would continue to benefit from all provincial protections, while gaining new bank-specific protections under federal law. Banks would be responsible to comply with the laws from both federal and provincial jurisdictions.

The FCAC and the Department of Finance also met with regulators and government officials from the Financial Conduct Authority in the United Kingdom and the Bank of Ireland to learn more about international approaches to financial consumer protection when developing the legislative Framework. The majority of the changes influenced by international approaches are found in the legislative Framework. For example, the new legislative requirement on banks to provide electronic alerts to help manage consumer fees was inspired by a similar requirement in the United Kingdom that demonstrated successful outcomes. Other new legislative requirements, such as the general prohibition against providing misleading information, and the new requirement for banks to have policies and procedures to ensure it offers or sells products or services that are appropriate for a consumer, given their financial needs and circumstances, were inspired by similar provisions in these jurisdictions.

International practices for bank complaint handling were considered when developing the timelines for complaints handling. Other jurisdictions tend to require banks to address complaints in less than 60 days (45 days in Australia; 56 days in the United Kingdom). Timely resolution of consumer complaints is a best practice as noted in the Organisation for Economic Co-operation and Development/G20 High-Level Principles on Financial Consumer Protection. The new 56-day time period set in the Regulation will help bring Canada in line with best practices and other jurisdictions.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

The legislative Framework and the Regulations are intended to protect financial consumers and may have larger benefits for groups with lower financial literacy, which refers to having the knowledge, confidence and skills necessary to make responsible financial decisions.footnote 58 This is important because gender and many other identity factors such as age, ethnicity, and disability often intersect and have implications in terms of financial consumer protection needs.

Among Canadians, certain subgroups are more at risk of having low levels of financial knowledge and financial confidence. These include women, youth, seniors, those living in low-income households and those with lower levels of educational attainment.footnote 59 Relative to men, women are less likely to consider themselves financially knowledgeable (31% of women vs. 43% of men rate themselves as financially knowledgeable).footnote 60 Women are also less likely to correctly answer key questions related to interest inflation and risk diversification (15% of women vs. 22% of men were able to answer all correctly).footnote 60 Low levels of financial confidence are associated with poorer outcomes related to meeting financial commitments, making bill payments, debt management, future planning and savings, and seeking out financial information.footnote 61,footnote 62 In addition, women, seniors, low-income households, and those with lower levels of educational attainment are particularly likely to rely on their banks when making decisions about their banking products and services. It is also important to recognize that other Canadians may have unique needs such as recent immigrants, Indigenous people and those with a disability.

The regulatory requirement for banks and authorized foreign banks to provide access to a website or telephone number for consumers to obtain the most up-to-date interest rate on a deposit type instrument that is scheduled to renew could therefore yield enhanced benefits for women, including older women, with respect to their ability to understand and make financial decisions associated with financial products and services, as they will have a resource to obtain the most current interest rate for their savings products.

Regulatory measures to help consumers' access funds and provide basic banking services are likely to have a greater positive impact on vulnerable populations, who are often most in need of low-cost financial services and may disproportionally incur certain fees. The Regulations help to ensure Canadians who rely on Government of Canada payments for their basic income are able to cash cheques they may receive, free of charge, even if they are not a customer of a bank. These populations include Canadians with lower incomes or those living with disabilities including mental illness, for whom financial inclusion can play an important role in helping to improve their quality of life.

Implementation, compliance and enforcement, and service standards

Implementation

The new legislative Framework and the Financial Consumer Protection Framework Regulations will come into force on June 30, 2022. The coming-into-force date is set for over three years after the legislation received royal assent, and approximately two years from the date of final consultation with industry stakeholders and the FCAC. This provides industry with a clear date to work towards, and allows the banks to prioritize the necessary information technology systems changes and develop new policies and procedures to comply with the legislative Framework. This takes into account operational delays to implementation due to the COVID-19 pandemic, while still balancing the need to implement the new requirements as quickly as possible, to help ensure financial consumers are protected.

The FCAC and banks have established a working group to discuss implementation of the new legislative Framework, including the identification of areas where regulatory guidance and clarification would be necessary. These discussions and consultations are ongoing. The FCAC is also working to update its internal policies and procedures as well as its guidance to banks, as needed.

The regulatory provision to support access to basic banking service involves Public Services and Procurement Canada (PSPC). PSPC is responsible for the printing of cheques, and for negotiating the rules that banks must follow to be indemnified in the event they cash a fraudulent Government of Canada cheque under the access to basic banking rules. As the maximum amount of a Government of Canada cheque that can be cashed is increasing, PSPC has begun to update the indemnification rules to reflect this change in advance of the Regulations coming into force. The rules are available on the Payments Canada website.

Compliance and enforcement

The FCAC is the federal regulator dedicated to supervising and enforcing compliance with the consumer protection provisions in the new legislative Framework and in the Regulations.

The FCAC takes a proactive approach to supervision. Through its supervision work, the FCAC strives to identify emerging issues and market trends early, and intervenes quickly to foster sound market conduct.

The FCAC also takes a proportional approach to its supervision and enforcement activities. The level of market conduct risk presented by each bank or authorized foreign bank determines the level of resources the FCAC dedicates to its supervision.

Further, the FCAC takes enforcement action that is proportionate to the circumstances of the breach, and has a range of tools available to it to help incent compliance. For example, for isolated or minor breaches, the FCAC may issue a letter to the bank and undertake enhanced monitoring. For more serious breaches, the FCAC may request that a bank or authorized foreign bank enter into a compliance agreement, or may issue a notice of violation and an administrative monetary penalty (AMP).

Changes to the FCAC's mandate and powers, which form part of the legislative changes in Budget Implementation Act, 2018, No. 2, provide the FCAC with additional compliance tools, including the ability to order banks to comply with their obligations, including that they provide restitution when charges have been improperly collected; and impose AMPs of up to $10 million per violation (the current maximum is $500,000), and a mandatory requirement to publicly name banks and authorized foreign banks that breach their statutory requirements. These changes came into force on April 30, 2020.

These changes provide additional compliance tools to the regulator, but will not change their overall approach to enforcement and supervision, which is to take a proportionate approach to compliance issues and work with the bank to resolve issues for consumers.

Contact

Erin O'Brien
Director General
Financial Services Division
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Telephone: 613‑796‑6157
Email: erin.obrien@fin.gc.ca