Is there a consumer financial protection bureau in Canada?

For the last several decades, the Canadian government has viewed consumer protection as one of its most important duties. Whether it’s regulations on the safety of vehicles, ensuring food is high-quality, or regulating how schools and daycare facilities keep children safe, the government has taken a front-seat role in safeguarding the Canadian consumer.

Our American neighbors have had the same goal and we share many of the same regulations, including those in the area of finance. Regulation in finance is so important because it is both ever-present in our lives and also supremely complicated. Have you ever taken a look at the paperwork that comes with buying a house or signing up for a credit card? It’s incredibly in-depth and there is no way that an ordinary person could or would read through all the fine print. That’s why the Canadian government created the Financial Consumer Agency of Canada (FCAC). Read on to learn a bit more about FCAC, what they do, and how they can help you.

Weren’t we always regulating finance?

Yes, but in a different way. Following the financial crisis in 2008, the US government sought to create a more unified structure to regulate the financial services industry. The Consumer Financial Protection Bureau (CFPB) was developed as a way to take the very disparate agencies regulating finance and bring them all under one roof. The Canadian government, however, saw the need for this unified structure long before. In 1996, the Task Force on the Future of the Canadian Financial Services Sector was formed and assigned, over a five-year period, to study the role of financial services regulators in the country, the powers they held, and whether they were sufficient in protecting Canadians. In 1998, the task force presented its report to the government, finding that the then-current system of regulation was wholly inefficient for protecting consumers. The report laid 57 different recommendations for reforming the space including the creation of an agency whose sole focus was consumer financial protection.

In 2001, the Financial Consumer Agency Act came into fruition, which created the FCAC with the goal of strengthening oversight of federally regulated financial entities and increasing financial consumer education. The agency, the financial sector, and the global economy faced a tough test in 2008 as the financial crisis, caused in part by the collapsing housing market, led to widespread panic and nearly uniform calls for changes to financial regulation. The United States government passed the Consumer Financial Protection Act, creating its own FCAC called the Consumer Financial Protection Bureau or CFPB.

The Canadian parliament also saw the need to add some additional teeth to the FCAC’s mandate. In addition to the regulatory enforcement powers it already had in the area of banks, lending, mortgages, and more, the FCAC was given more power to conduct research on consumer trends and inform the government, and to expand its role in consumer financial protection broadly to cover nearly all aspects of the space. In 2018, the FCAC’s mandate was expanded again to include financial literacy as a core part of its mission.

Cool—what does all that mean for me?

Fair question. The history of financial regulators isn’t the most riveting topic ever, but the FCAC has a constant and important role in your life as a Canadian. Whenever you sign paperwork for any type of financial product, you’re directly benefiting from the regulatory and enforcement power held and wielded by the FCAC. Basically, they ensure that everything in the financial services industry is fair to both the consumer and the financial institution. This is an important distinction to make. Historically, financial institutions have held sway over consumers as the party with more power in most situations. The FCAC works to balance that relationship, reframing it as more mutually beneficial, and ensuring that the consumer is able to access financial services and the institution is able to make money and continue to serve customers.

Now sometimes that doesn’t happen and the FCAC has to step in and make things right. The FCAC writes regulations that financial institutions must legally follow. Some institutions will knowingly ignore these regulations or inadvertently break the rules. When this occurs, the FCAC takes off its regulatory hat and puts on its enforcement hat. It has the power to take a financial institution or individuals to court, levy fines, mandate change within an organization, and force the offending company to pay restitution to consumers.

Consumer Complaints

One of the main ways that the FCAC knows where to focus its attention is the consumer complaint system. All financial institutions are required by law to have robust complaint reporting systems in place to help solve issues with consumers. These include processes that protect consumers and ensure that their issues are fairly heard. Unlike the CFPB in our southern neighbor, the FCAC doesn’t get involved in individual complaints. It will take broad action if a company is found to be at fault in a high number of cases, but won’t get involved if you specifically have an issue. Instead, it regulates and requires banks to maintain their own complaint systems.

You can submit a complaint by contacting the branch’s dedicated complaint department. If you don’t feel your issue is resolved, you can escalate the case up to the most senior staff that handles complaints at the bank. If you still don’t feel you’re getting a fair shake, you can once again escalate your case to the company’s external complaints body. This often takes the form of an ombudsman and is meant to be independent of the other complaint systems. Provincial regulators may also be helpful in resolving issues with financial institutions.

Financial literacy

The Canadian government has a five-year plan to promote financial literacy in the country and the FCAC is a key part of that strategy. Announced in July of 2021, the nationwide push for greater financial literacy is focused on removing barriers of access to quality financial products, helping to simplify financial decision making and helping to build financial skills more broadly.

The FCAC will work closely with community organizations, other agencies and the finance industry to provide educational resources, budgeting tools, financial assistance, and more to realize the strategy. The FCAC already offers a number of different tools and calculators, paired with supporting information, to help consumers make the financial decisions that are right for them.

The FCAC is focused on ensuring that Canadian consumers are protected when using financial services and products. A direct result of inefficiencies seen in the early 2000s and the financial crisis a decade later, the agency regulates and enforces the financial services industry and provides Canadians with a necessary method and system for complaints. The agency also works hard to promote financial literacy among all Canadians.