December 3, 3013 – A strong financial system is one in which consumers are confident that their interests are well protected by a high-quality regulatory framework. The Honourable Kevin Sorenson, Minister of State (Finance), alongside the Honourable Maxime Bernier, Minister of State (Small Business and Tourism, and Agriculture) and Lucie Tedesco, Commissioner of the Financial Consumer Agency of Canada (FCAC), today announced the launch of consultations on a comprehensive financial consumer code and the final publication in the Canada Gazette of regulations increasing protection of consumers using prepaid cards.
“From the banning of unsolicited credit card cheques to a mortgage prepayment code of conduct to help homeowners understand their obligations, our Government has made consumer protection a priority,” said Minister Sorenson. “With the launch of the Consumer Code consultations and new regulations for prepaid cards, Canadians will be better protected, informed and positioned to make responsible financial decisions for their families.”
As committed to in Economic Action Plan 2013, the Government of Canada will conduct consultations on the development of a new and comprehensive financial consumer code. The consultations will seek to establish high-level principles for a financial consumer protection framework leading to a Code that will streamline the existing and dispersed mix of legislation and regulations, and take into account the needs of vulnerable Canadians including seniors.
“A Consumer Code will help Canadians make more informed financial decisions today, and in Canada’s rapidly changing, increasingly digital financial marketplace in the future,” said Minister Bernier. “In line with the goals set out in the Speech from the Throne, these new prepaid card regulations are a timely and effective addition to the consumer toolkit.”
The new Prepaid Payment Products Regulations will require that fees for prepaid payment products which allow consumers to make purchases or cash withdrawals using funds that have been pre-loaded onto a card, be disclosed to consumers in an information box displayed prominently on the product’s exterior packaging.
They also require that other information for consumers regarding these products be provided prior to issuing the card and in a manner that is clear, simple and not misleading. In addition, the regulations limit certain business practices that could be harmful to consumers. For example, they prohibit pre-loaded funds from expiring on customer purchased products and maintenance fees for at least one year after activation.
Canadians will have the ability to comment during these Consumer Code consultations for the next 12 weeks. This feedback will be used as the basis for roundtable discussions across Canada in 2014. The Consumer Code consultation paper being released makes specific reference to FCAC and asks what additional tools and authorities FCAC may need in order to effectively carry out its supervisory role in a principles-based financial consumer protection environment.
“Both the launch of the Consumer Code consultations and the final publication of the Prepaid Payment Products Regulations have immediate inroads to the work of FCAC,” said Ms. Tedesco. “We look forward to reading consumers’ views on that question, because this role is one that is central to our mandate.”
Comments on the attached draft consultation paper can be submitted to the Department of Finance at email@example.com or to the address below. The closing date for comments is February 28, 2014.
Financial Sector Policy Branch
Department of Finance
140 O’Connor Street