Throughout their lives Canadians are faced with a number of important, and increasingly complex, financial decisions for themselves and their families. Whether it is saving for retirement, saving for a child's education or financing a new home, the range of possible options is growing and financial products and services are becoming more sophisticated.
The Harper Government has taken decisive action to protect consumers of financial products and services, and to increase the financial literacy of all Canadians. Recent measures have included:
Code of Conduct for Federally Regulated Financial Institutions on Mortgage Prepayment Information
In Economic Action Plan 2010, the Government committed to bring greater clarity to the calculation of mortgage pre-payment penalties. Delivering on that commitment, the Government has released a voluntary Code of Conduct to ensure that federally regulated financial institutions provide enhanced information to consumers in respect of their mortgages where a prepayment charge could apply.
The purpose of the voluntary Code of Conduct is to assist borrowers in making decisions about prepayment of their mortgage. The Financial Consumer Agency of Canada will monitor compliance with the voluntary Code.
Access to Funds Regulations
In Economic Action Plan 2010, the Government announced its continued commitment to ensure affordable access to basic banking services for all Canadians. To provide timelier access to funds, the Access to Funds Regulations will reduce the maximum cheque hold period for retail depositors and small and medium-sized enterprises. The regulations will also provide retail depositors with timelier access to funds.
Specifically, the new regulations would reduce the maximum cheque hold period to four business days for cheques not exceeding $1,500. In addition, federal financial institutions will be required to provide immediate access to the first $100 deposited by cheque in person in a branch, and on the next business day for cheques deposited by any other means (e.g., automated teller machines).
The regulations will apply to regular paper-based cheques drawn on a financial institution located in Canada, deposited in Canada and issued in Canadian dollars. Final publication of these proposed regulations is expected in the coming weeks.
Negative Option Billing Regulations
Economic Action Plan 2010 committed to bring forward regulations to prohibit negative option billing in the financial sector and require federal financial institutions to offer products and services on an opt-in basis only, where consumers have sufficient disclosure about the terms and conditions before accepting.
The Negative Option Billing Regulations will require federally regulated financial institutions to first obtain consumers' express consent before providing an individual with a new optional product or service, such as credit balance insurance or fraud alerts. The regulations will set out requirements for federal financial institutions to disclose a summary of the key information related to the optional product or service prior to obtaining the consumer's express consent, including related fees and costs.
If consumers sign up for the optional products and services, federally regulated financial institutions will be required to provide comprehensive disclosure of the related terms and conditions. Furthermore, the regulations will require federal financial institutions to refund charges on a prorated basis following the cancellation of an optional product or service. Final publication of these proposed regulations are expected to come into force in the coming weeks.
Task Force on Financial Literacy
In 2009, as part of the measures to improve access to financing, strengthen Canada's financial system and support families, the government announced that it would bring forward measures to help consumers of financial products, including launching a Task Force on Financial Literacy. The Task Force on Financial Literacy was mandated to provide advice and recommendations to the Minister of Finance on a national strategy to strengthen the financial literacy of Canadians.
The Task Force's final report, submitted to the Minister in February 2011, and entitled Canadians and Their Money, makes recommendations for a cohesive national strategy to support initiatives across Canada aimed at improving financial literacy for all Canadians. Canada's national strategy on financial literacy will leverage the excellent efforts underway throughout the country, including those of the Financial Consumer Agency of Canada (FCAC), empowering Canadians to act knowledgeably and with confidence in managing their personal financial affairs.
In November 2011, the Government moved forward on the key recommendations of the Task Force and introduced the Financial Literacy Leader Act to provide for the appointment of a Financial Literacy Leader who will exercise national leadership to strengthen the financial literacy of Canadians.
The Act would also expand the responsibilities of the FCAC to include collaborating and coordinating with stakeholders to contribute to and support initiatives that strengthen the financial literacy of Canadians.