On Monday June 1st, the NDP (the Official Opposition
in the federal House of Commons) made a motion for the Government
to ban all "pay-to-pay practices" by banks operating in
Canada through the enactment of a mandatory financial code of
conduct to protect consumers. A "pay-to-pay" fee is
described in the motion as a fee a customer is charged just for the
right to pay their bill, however, the focus of the motion and the
ensuing debate in the House of Commons was on the practice of
charging consumers a fee for a paper statement. The (Conservative)
Government supported the motion and the motion was passed.
Legislation to prohibit "pay-to-pay" practices by
banks has not yet been drafted. Therefore, at this point, we do not
know exactly what will be prohibited. We note that legislation was
passed in December of 2014 which prohibits telecommunication and
broadcasting companies from charging fees to provide paper bills.
It is likely that banks will eventually be prohibited from charging
fees for paper statements, but it remains to be seen whether any
additional restrictions will be imposed on the fees that may be
charged by banks.
The NDP has requested the legislation be passed on this topic
before the Summer, but so far the Government has not agreed to this
request. In the House of Commons debate on Wednesday June
3rd, Finance Minister Joe Oliver noted that the
Government had obtained a voluntary agreement from banks not to
impose pay-to-pay fees and that this issue may be included in the
mandatory consumer protection framework, which was announced in the
2015 budget (see our blog post on that topic
here). The mandatory consumer protection framework is expected
to be drafted as an amendment to the Bank Act, however, as
noted in our blog
post of yesterday, the timing of these reforms is in doubt
because the House of Commons will soon break for the summer recess
and will not resume sitting until after the federal election, which
will be held on October 19th.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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