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Several measures to help consumers
March 5th, 2010In the context of the 2010-2011 budget presentation, the federal government announced several measures to regulate the commercial practices of financial institutions:
* It will prohibit negative option billing
In future, financial institutions will not be permitted to bill for a product or to offer a service to a consumer without the latter's explicit prior consent.
* It will standardize the calculation and disclosure of mortgage pre-payment penalties
Financial institutions will have to provide consumers with clear and detailed information on the calculation and the amount of penalties levied on pre-payment of a mortgage.
* It will reduce the maximum cheque hold period
The hold period on cheque deposits will be reduced from 7 days to 4. Given that settlement of a cheque between two financial institutions takes only one day, Option consommateurs would have preferred an even shorter hold period. We note, however, that consumers will have access to the first $100 within 24 hours. This measure should help the most disadvantaged consumers.
* It will strengthen the regulatory dispute resolution framework
Banks, including the RBC- The Royal Bank of Canada, will be required to belong to an approved third-party dispute handling body for the settlement of disputes with consumers.
We consider this a good decision which will avoid conflicts of interest.
Once they come into effect, these regulatory measures will mark a step forward in consumer protection in the financial services sector.
In addition, the government would prefer commercial practices in the credit and debit card industry to be governed by a voluntary code of practice.
Option consommateurs believe that this type of voluntary regulation has often been shown to be ineffective. It believes that the question of security of electronic payments is important enough that it should not be left to the vagaries of the market but should be set out in law.
(Option consommateurs submission on the Code of Conduct for the Credit and Debit Card Industry in Canada. Memorandum submitted to the Minister of Finance of Canada, January 18, 2010 )
