Ottawa releases proposed laws to protect bank consumers and their money
Proposed regulations for financial institutions released on Tuesday gives consumers faster access to their money, bans negative option billing, and requires financial institutions to receive consumer consent before signing them up for new products and services.
ACCESS TO FUNDS REGULATION
The Access to Funds Regulation provides consumers with access to the first $100 dollars deposited with a bank teller and reduces the check-holding period from seven days to four for checks up to $1500 dollars. For checks deposited at an ATM, the first $100 will be available the next day and checks for more than $1,500 will be subject to the old rules.
At a press conference at Credit Canada’s offices in Toronto Tuesday morning, Minister of State (Finance) Ted Menzie said that this regulation will probably most greatly benefit “those with a new account, like students, new businesses, that maybe aren’t long-standing clients of a bank.”
The old holding period of seven days had many constituents “distraught” over their money and a poll by the Canadian Payroll Association showed that 59 per cent of Canadian workers say they would be in financial trouble if their paycheck was delayed by just a week.
A further reduction of the hold period was pointed out to Menzies, who answered that “this is the minimum standard. We’d like to bring it lower (and that) if financial institutions want to reduce it, they’re welcome to do so.”
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NEGATIVE OPTION BILLING REGULATION
The Negative Option Billing Regulation requires federally regulated financial institutions to get consumer’s consent before providing new products and services. Automatically signing up consumers for products will no longer be allowed and financial institutions are also required to state all fees and costs involved.
The Executive director for Credit Canada Laurie Campbell praised both measures, saying they provide a “breath of fresh air” for seniors, the young and those with low incomes.
Menzies added that the measures "protect Canadian consumers by…ensuring greater transparency and making sure consumers have timelier access to their own hard-earned money." He added that "the economy remains our government's top priority."
Overall, these regulations are projected to be both popular and useful for Canadian bank consumers.
Critics have accused the government’s hard line actions to the hugely profitable banks as being both hypocritical and too little too late. For the last four quarters, banks have made profits of over $20 billion. These critics call for further reforms to help consumers with high credit card interest rates and service fees from banks.
The new regulations are subject to a 30-day comment period that starts Saturday. Mr. Menzies said once that period has passed, the government plans to implement the new regulations quickly. The new regulations do not apply to financial institutions that are not federally regulated.