In June 2001, the federal government passed Bill C-8 to update and
improve the framework governing Canada’s financial services sector.
The package of reforms consists of new laws, guidelines and statements
of government policy. They are designed to provide better protection
for consumers, increase competition, improve the regulatory environment
and promote the growth of the sector.
Here is a summary of the key
changes:
Empowering and Protecting Consumers
Increasing Competition in the Domestic Marketplace
Promoting the Efficiency and Growth of the Financial
Sector
Improving the Regulatory Environment
What do the reforms mean for me?
Where to Get More Information
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Empowering and Protecting Consumers
- The creation of a Financial Consumer Agency to strengthen oversight
of consumer protection measures and promote consumer awareness
- Measures to improve access to financial services regardless
of one’s income or place of residence, including a standard low-fee
account and a process to govern branch closures
- Prohibition on coercive tied selling
- Measures to improve the information consumers receive when purchasing
services or making investments
- Public Accountability Statements for large institutions to report
on their contributions to the Canadian economy and society
- More and better statistics on the financing needs of small and
medium-sized businesse
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Increasing Competition in the Domestic Marketplace
- Lowered capital requirements to start a financial
institution (from $10 million to $5 million)
- Less restrictive ownership rules for financial institutions,
in order to encourage new competitors
- Allowing life insurance companies, securities dealers
and money market mutual funds to join the payments
system and be able to offer payment services to their
customers (e.g., cheques, debit cards)
- Flexibility for credit unions to create a national
presence to better compete with large institutions
- Greater flexibility for foreign banks wishing to
operate in Canada
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Promoting the Efficiency and Growth of the Financial Sector
- Allowing financial institutions to create holding
companies to organize their business activities, offering
the potential for greater operational efficiency and
lighter regulation
- Permitting financial institutions to make a broader
range of investments to take advantage of new business
opportunities and technologies
- A new definition of the "widely held"
ownership rule for banks (doubling to 20% the permissible
holding by a single investor), which provides new
opportunities to enter into strategic alliances and
joint ventures
- Guidelines for merger proposals between large banks,
including a transparent review process and a formal
mechanism for public input
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Improving the Regulatory Environment
- A streamlined process for financial institutions
to obtain regulatory approvals
- New powers for the Superintendent of Financial Institutions
to deal with the potential risks arising from increased
competition
- Streamlined reporting requirements related to Canada
Deposit Insurance Corporation standards
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What do the reforms mean for me?
Overall, there are significant benefits for consumers.
They will have more choices in deciding who fulfils their
financial needs. The reforms encourage new competitors
in the marketplace, increased competition among existing
institutions, and more innovative products and services.
There are stronger accountability requirements for financial
institutions, with a newly created body dedicated to consumer
protection and education: the Financial Consumer Agency
of Canada (FCAC). The FCAC promotes consumer awareness
of financial issues and ensures that financial institutions
comply with federal consumer protection measures. The
reforms also increase transparency and public awareness.
Financial institutions are required to provide consumers
with certain information when they purchase services or
make investments, and must give sufficient notice when
closing a branch.
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Where to Get More Information
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