By Lucie Tedesco, Commissioner, Financial Consumer Agency of Canada
In Canada, consumer education and strong supervision of the financial services sector form the basis of consumer protection. Education empowers consumers to make informed financial decisions that best meet their needs, and supervision ensures that their rights are protected. Together, education and supervision allow Canadians to contribute to the marketplace, strengthen competition and deliver the best results for financial institutions and the Canadian economy as a whole.
As the newly appointed Commissioner of the Financial Consumer Agency of Canada (FCAC), the federal agency that protects Canadian consumers and informs them about financial matters, I believe we have an opportunity to lead consumer protection in Canada to the next step of its evolution: leveraging efforts, resources and best practices in the areas of financial supervision and education, while tapping into the latest trends and issues that impact financial consumers nationally and internationally to inform Government of Canada policy.
In 2001, FCAC emerged from an identified need to consolidate and strengthen oversight of consumer protection measures in Canada’s federally regulated financial sector and to expand consumer education in finance. Since then, our experience has shown that the compliance enforcement and financial literacy elements of our mandate feed, support and promote one another.
Today, the Agency’s ability to conduct research into the issues that are the most relevant to financial consumers informs federal government policy. Education, supervision, and research constitute the pillars of a consumer-focused system that seeks to empower Canadian financial consumers and enhance responsible financial market conduct in Canada.
Firstly, engaging consumers in a secure and fair marketplace is a shared responsibility among industry associations, financial service providers, consumer groups and various levels of government. In anticipation of the appointment of Canada’s first Financial Literacy Leader, FCAC is coordinating and collaborating on consumer education initiatives across the country to strengthen Canadians’ overall financial literacy. Under the direction of the Leader, the Agency will continue to work with multiple partners and collaborators nationwide to develop resources and tools to address the needs the Canadian population, including youth, newcomers and seniors.
With government departments, regulators and community organizations working together, the Agency will be better positioned to promote public awareness of financial institutions’ obligations, ensure that Canada’s consumer protection framework addresses the potential risks associated with new products, and develop tools and resources aimed at addressing the current and future needs of various segments of the Canadian population within this increasingly complex financial services sector.
Secondly, by remaining responsive to developments and innovations in the financial industry, the Government of Canada has established one of the strongest and most effective financial consumer protection frameworks in the world. FCAC has been at the forefront of the framework as the supervisory agency responsible for ensuring that federal financial entities implement and continue to comply with applicable laws, rules and obligations.
Through our work, we ensure that financial consumers in Canada continue to benefit from the protection provided to them by the framework. By applying a proactive and risk-based supervisory approach we seek to identify, address and rectify key compliance issues in the marketplace, minimizing their impact on financial consumers in Canada.
We continue to hone our supervisory process and information collection activities, improving our ability to identify compliance risks and to remain ahead of changes in the marketplace. For example, FCAC will further develop its processes to undertake comprehensive thematic industry reviews to better monitor and assess ongoing adherence to rules within the financial services sector.
Finally, in an ever-evolving environment, marked by rapid technological innovations and the introduction of increasingly complex financial products and services, relevant market research equips the Government of Canada with evidence-based ways to inform and protect consumers of financial services and products. Monitoring trends to identify risks to consumers in today’s financial marketplace supports Canada’s regulatory framework and financial literacy agenda.
When FCAC was first created, mobile payments were in their infancy. Now the market has grown to the point where “Mobile Payments and Consumer Protection in Canada” became the first report published under FCAC’s research mandate. In turn, the Agency is developing material to help consumers understand these new payment methods and how to protect themselves from the inherent risks. FCAC is also taking part in federal consumer protection policy discussions on the matter.
Through its research, FCAC seeks to support the financial decision-making of consumers to ensure better outcomes and an improved state of financial well-being. By undertaking research that focuses on the factors that motivate and influence consumer behaviour, the Agency will begin to refine its educational initiatives and policy recommendations to have a greater impact on the decision-making processes of key segments of the population.
The Agency’s research capacity also enables it to work with domestic partners and industry stakeholders to close knowledge gaps and address systemic consumer protection issues. At the international level, FCAC is now contributing to a broader knowledge exchange, determining how other supervisory bodies are responding to similar issues, and advocating for effective supervisory approaches.
I am proud of what the Agency has accomplished since it was established and am honoured to have been given the opportunity to shape its future. As the Agency fulfills its consumer protection mandate through relevant industry research that informs program and policy development; greater coordination and collaboration that improves the financial literacy of Canadians; and a supervisory system that promotes the adoption of consumer-centred compliance measures while ensuring applicable laws are upheld, it is well positioned to develop forward-looking guidance and promote the adoption of sound consumer protection practices.