Financial Consumer Agency of Canada

Financial Consumer Agency of Canada

October 03, 2005 11:29 ET

VALUE FOR CANADIANS: FCAC Releases Fourth Annual Report

Attention: Business/Financial Editor, News Editor, Government/Political Affairs Editor OTTAWA, ONTARIO--(CCNMatthews - Oct. 3, 2005) - Today the Financial Consumer Agency of Canada (FCAC) released its fourth annual report. The report outlines how the Agency's activities as a regulator of market conduct contribute to a healthy, competitive and fair marketplace.

"As Canadian consumers participate in an increasingly complex financial marketplace, they face considerable challenges. In such a marketplace, clear and accurate consumer information is essential to making informed choices, as is appropriate market conduct," explains FCAC Commissioner Bill Knight. "As a market conduct regulator, our job is to ensure that all participants in the system have the information they need. This annual report shows that, with greater awareness, consumers and the industry can identify problems and work together to improve Canada's financial system."

During fiscal year 2004-05, FCAC improved the Canadian financial marketplace for millions of consumers by:

· conducting its third annual general examination of all 424 federally regulated financial institutions to evaluate how they comply with the applicable consumer provisions;
· updating FCAC's compliance framework, which details how the Agency executes its mandate for supervising a financial institution's compliance with the consumer provisions, set out in legislation, codes of conduct and public commitments;
· conducting a large-scale mystery shopping exercise to measure the banks' performance in complying with the new Access to Basic Banking Services Regulations. The results of the exercise will be analyzed during 2005-06;
· reviewing the clarity of language used by banks in the disclosure of the prepayment penalty clause in mortgage documents. The Agency examined more than 100 mortgage documents in English and French containing mortgage prepayment clauses. The review revealed common weaknesses in the documents of many of the Canadian banks. FCAC required the institutions involved to take corrective measures and has closely monitored the implementation of these changes;
· monitoring the Canadian Code of Practice for Debit Card Services for federally regulated financial institutions, which stipulates that, under certain conditions, consumers will not be held liable for unauthorized use of their debit card. During 2004, the industry revised the code to clarify the procedures for dealing with unauthorized transactions and other transaction problems. Now that the revised code is in place, FCAC will continue to monitor how federally regulated financial institutions comply with it.

Through its outreach initiatives, FCAC has informed millions of Canadians about their rights as consumers of financial products and services. During fiscal year 2004-05, FCAC responded to 26,145 inquiries and complaints from consumers. This represents a remarkable 69 percent increase in demand over the previous year, and more than double the number handled during FCAC's first full year of operation, 2002-03.

FCAC met this demand for information from financial consumers by:

· conducting focus-testing sessions to revise and redesign its brochures, to produce plain-language publications for audiences with lower-income and lower-literacy levels, making important financial information more accessible and easier to understand;
· distributing more than 500,000 copies of its consumer publications, in print as well as through its Web site;
· updating and developing new publications such as The ABC's of Mortgages and The Cost of Payday Loans; and issuing a revised version of The Cost of Banking Guide, Credit Cards and You, Cashing your Government of Canada Cheque for Free and Opening a Personal Bank Account;
· providing interactive tools on its Web site, such as two new databases designed to keep consumers informed about branch closures and complaint-handling procedures pertaining to various financial institutions;
· providing one of the most extensive "Questions and Answers" sections pertaining to financial services in Canada on its Web site. This database is quickly becoming Canada's pre-eminent source of current financial consumer information;
· making important banking information more accessible to lower-income and lower-literacy consumers by forming strategic partnerships with the Canada Revenue Agency and Social Development Canada. FCAC distributed information about consumers' rights to a bank account, access to low-fee accounts and the direct-deposit option for federal government cheques to 7.5 million consumers, through mailing inserts. As a result, more than 230,000 Canadians switched to direct deposit to receive their GST and Child Tax Benefit cheques.

Commenting on the Agency's achievements this past year, Commissioner Knight reveals one of the things he is most proud of: "We are establishing new ground in the marketplace by identifying information gaps and by subsequently providing consumers with the information they need to make sound financial decisions and actively participate in-and-strengthen the financial services marketplace. As we have done since we began operations, we will continue to work proactively to inform Canadians about financial matters and, through our oversight and monitoring of the federally regulated financial industry, protect their rights."

The complete annual report, along with other FCAC publications, is available in the Publications section of FCAC's Web site, at www.fcac.gc.ca and through FCAC's Consumer Contact Centre, at 1-866-461-3222.

FCAC ensures compliance with the consumer protection laws that apply to banks and federally incorporated trust, loan and insurance companies. FCAC also provides consumers with accurate and objective information about financial products and services, and informs Canadians of their rights when dealing with financial institutions.

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Media contacts:

Martine Bélanger Christina McDonald
Media Relations Officer Communications Officer
(613) 941-8982 (613) 941-4168
belanger.martine@fcac.gc.ca mcdonald.christina@fcac.gc.ca

Highlights

Value for Canadians: FCAC's 2004-05 Annual Report

Compliance statistics

FCAC investigates complaints involving non-compliance with:

· the consumer provisions in the federal legislation regulating financial institutions, and
· the voluntary codes and public commitments adopted by financial institutions.

During fiscal year 2004-05, FCAC opened 1,342 compliance cases:

· FCAC closed 771 cases involving compliance issues related to the consumer provisions. Of these, 26 involved a total of 30 violations (a single case can involve more than one violation).

· FCAC closed 206 cases related to codes of conduct and public commitments. In general, the top three issues identified in these cases were related to credit cards (zero liability), the debit card code and the accessibility of complaint procedures. Of these, there were four instances of non-compliance pertaining to the Code of Conduct for Authorized Insurance Activities and the Credit Card Zero Liability Public Commitment.

As of March 31, 2005, FCAC closed 1,142 compliance cases.

As a result of FCAC's monitoring activity, the Commissioner issued 14 Letters of Reprimand, entered into 1 Compliance Agreement and issued 2 Notices of Violation, with Administrative Monetary penalties totalling $80,000.

Branch closures

Banks and federally regulated trust and loan companies are required to file notices with FCAC if they intend to close a branch.

In fiscal year 2004-05, FCAC received 143 branch closure filings from the financial institutions. In total, there were three cases closed, with 4 violations identified in regards to branch closures where the financial institutions involved failed to meet the filling requirement. There were only two cases in which the Commissioner required a public meeting with FCAC, the bank and other interested parties in the community to discuss the closure.

Inquiries and complaints

During the period being reported on, FCAC received 28,788 consumer contacts (which includes in-person visits, phone calls, e-mails and regular mail). Excluding general inquiries (12,514), the top five categories into which these inquiries and complaints fell are as follows:

· accounts (4,795)
· loans (2,191)
· credit cards (1,960)
· investments (1,416)
· insurance (1,096)

Publication statistics

FCAC distributed more than 500,000 publications to Canadian financial consumers during fiscal year 2004-05, including both printed (173,541) and downloaded (342,810) publications. This is an increase of 61 percent (516,351) over 2003-04 (313,063). The most frequently downloaded FCAC publication was the multi-piece Credit Cards and You kit (72,469), followed by brochures describing Canadians' rights when opening a bank account.

Web site statistics

During the past year, FCAC's Web site averaged close to 1,300 visitors per day, almost double the daily average for the previous year. There were more than 450,000 visits to the site in 2004-05, up from 254,854 in 2003-04. In fact, the number of visits to FCAC's Web site has more than tripled since the Agency's first full year of operations, 2002-03.

Financial reporting

FCAC is funded by assessments on Canada's federally regulated financial institutions. For its third full year of operations, FCAC's expenses totalled $7.25 million - below its projected budget of $7.75 million.

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/For further information: Christina McDonald
Communications Officer
(613) 941-4168
mcdonald.christina@fcac.gc.ca
/ IN: FINANCE, SOCIAL

Contact Information

  • Martine Bélanger, Media Relations Officer, Financial Consumer Agency of Canada (FCAC)
    Primary Phone: 613-941-8982
    Toll-Free: 866-461-3222
    E-mail: belanger.martine@fcac.gc.ca