(September 2026)
A. Both watchdogs too weak in powers, and enforcement attitude, to protect financial consumers and investors
1. Financial Consumer Agency of Canada (FCAC) is an ineffective lapdog
The Liberals and Conservatives, which have been the parties running the federal government since Canada became a country, have done very little to protect the 28 million customers of Canada’s Big Banks from gouging, discrimination and other abuses, and instead have been dedicated to protecting multi-millionaire bank executives from accountability for the harms their banks cause to financial consumers and individual investors, including by hampering bank watchdog agencies with weak enforcement powers.
The federal government’s Financial Consumer Agency of Canada (FCAC) has a very weak enforcement record since it was created in 2001.
It has made only 150 compliance rulings. Prior to 2019, the FCAC was not allowed to publicly identify a bank even if the bank violated the Bank Act and was fined for its violation The bank could only be identified if the FCAC prosecuted the bank, and since 2001 the FCAC has only prosecuted two banks (neither of them a Big 6 Bank).
The FCAC not only lacks resources by comparison to the similar watchdog agencies in Britain and the U.S., it is also clearly a lapdog compared to these two other agencies.
According to an article by Reuters in March 2017, and Democracy Watch’s research of fines imposed since then, the FCAC has issued fines totalling just $34 million since 2001 in the 150 rulings it has issued. Before 2001, there were essentially no consumer protections, and no penalties for harming consumers, in Canada’s Bank Act. From 2001 to 2007, the FCAC was only allowed to penalize a bank a maximum of $100,000 no matter how much a bank abused or harmed its customers, and no matter how many customers were harmed. The maximum fine was increased to $200,000 in 2007, and then to $500,000 in 2012, and then to maximum $10 million in April 2020.
Out of the total of $34 million in fines that the FCAC has imposed since 2001, almost all the fines have been imposed since August 2020 ($31 million has been imposed since September 2022, and another $2.7 million was imposed from August 2020 to December 2021). All of the above facts and figures show just how weak and ineffective the FCAC’s enforcement was before 2020.
However, the FCAC is still weak and ineffective. Given Canada’s Big Banks each make on average more than $10 billion in profits each year, the maximum fines before 2020 were ridiculously low and essentially meaningless, especially if the bank made more than a few hundred thousand dollars by violating the Bank Act. The current maximum $10 million fine is still too low as it is only a possible maximum fine (the FCAC has never fined a bank more than $6.5 millIon), and even if the maximum fine was ever imposed by the FCAC, it would only amount to about 0.1% of the average annual profits of any of Canada’s Big Banks.
In contrast, since 2013 when it was created until August 2026, Britain’s Financial Conduct Authority (FCA) imposed penalties totalling 4.9 billion pounds ($9.15 billion Can.), and since 2011 when it was created up to January 2025, the U.S. Consumer Financial Protection Bureau (CFPB) imposed penalties totalling more than $5 billion U.S. (more than $7 billion Can.) and an additional more than $21 billion U.S. (more than $29 billion Can.) in compensation and cancelled debts for financial consumers that have resulted from CFPB enforcement actions, for a total of more than $34 billion U.S. (more than $47 billion Can.) in financial penalties and costs for U.S. banks.
Key consumer protection rules need to be strengthened, and the FCAC must be required to do regular (at least twice annually) unannounced, mystery-shopper audits to find violations, required to publicly identify financial institutions who violate the rules, and required to impose high fines on violators. The FCAC didn’t do any unannounced audits of Canada’s Big Bank from 2005 up to the end of 2016, and then tipped off the banks in March 2017 about the audit they did through the rest of 2017 on abuses, and then allowed the banks to see the draft audit results and suggest changes that weakened the report. The FCAC finally did another unannounced mystery-shopper audit in fall 2019 which the FCAC initially buried but finally made public in May 2022. The audit found that 32% of bank account shoppers and 45% of credit card shoppers were misled and/or offered products and services that were not in their financial interest, especially Indigenous, visible minority and student shoppers. This result is not surprisingly given how weak and ineffective the FCAC’s enforcement had been since 2001. There is no evidence that the FCAC has done a mystery-shopper audit since 2019.
2. Ombudsman for Banking Services and Investments (OBSI) is also ineffective
The record of the Ombudsman for Banking Services and Investments (OBSI) since it was created in 1996 is not much better than the FCAC’s record, also in part because the federal government has failed to give it key enforcement powers. Initially, the majority of the members of the board of the Canadian Banking Ombudsman (CBO — it become OBSI in 2002) were from the banking industry so that made it biased in favour of the banks. Then after 2006, former Conservative Finance Minister Jim Flaherty allowed several of Canada’s Big Banks to leave OBSI and set up their own biased arbitrators to handle appeals of complaints.
Then Minister Flaherty and former Liberal Finance Minister Bill Morneau did nothing, and former Liberal Finance Minister Chrystia Freeland moved as slowly as possible, to require TD, Royal, Scotiabank and National Bank to stop using their own biased complaint judges and return to using the OBSI — which finally happened in November 2024.
However, since 1996, financial consumers and investors have been required to go through their bank’s or investment company’s internal complaint-handling process before they are allowed to file their complaint with OBSI, and banks and investment companies have delayed handling complaints or played other games to frustrate complainants in many cases. In addition, OBSI can only make recommendations about how a bank or investment company should resolve a complaint because the Liberals and Conservatives have failed to give OBSI the power to issue binding orders.
An FCAC investigation in 2018-2019 that was released in February 2020 found that Canada’s Big Banks have a horrible record of dealing with financial consumer and investor complaints, especially the banks that used their own complaint judges. Another review in 2024-2025 of small and medium-sized banks found that their complaint-handling systems also had several serious delays and barriers that frustrate customers who file complaints. There is no evidence that the FCAC has reviewed the Big Banks’ complaint-handling systems since 2019.
All banks and investment companies should be required to use OBSI, and financial consumers and investors must be allowed to complain directly to OBSI without having to go through a financial institution’s internal complaint system, and OBSI’s rulings on complaints by bank customers and investors must be made binding in every case.
B. Watchdogs need stronger powers and mandatory penalties
To ensure all violations of consumer rights and protections are effectively discouraged by high, mandatory penalties, and to ensure the watchdogs actually penalize violations, the OBSI and the FCAC and (in the case of prosecution) the courts must all be required to to impose a minimum fine of at least $1 million for each violation, and to impose a sliding scale of required higher fines that increase based on the seriousness of each violation, and must be required to impose a $50 million fine for each most serious, systemic violation. And they must be required to name and shame the violating bank each time they impose a fine.
The Financial Consumer Agency of Canada (FCAC) and the Ombudsman (OBSI) will continue to be ineffective until the federal government gives them key powers and requires them to use those powers to audit banks and other financial institutions regularly and to penalize every violation with a high fine (there should be minimum fines for various violations of at least $1 million, and the maximum fine should be $50 million) and public naming and shaming.
C. Citizen watchdog groups must be created to watch the watchdogs, and to represent and help consumers and investors
Finally, the federal government must establish broad-based, fully independent, national consumer and individual investor watchdog groups using a proven, low-cost and effective method. These groups are needed to empower financial consumers and investors by having their own watchdog groups that will: push the FCAC and OBSI to enforce protection and accountability laws effectively; represent them effectively in government policy-making and legislative processes; help them with expert advice for choosing the best products and services for their financial needs, and; help them complain effectively to their bank and/or investment company, and to the FCAC and OBSI, when they are gouged, discriminated against or abused, including by providing free legal services for individual and class-action lawsuits.
These groups can be created at little or no cost to governments or financial institutions using a method that has been proven in the U.S. to be very effective. The federal government can require banks, trust and insurance companies to promote in their mailings and emails to customers that they can join an independent, consumer-run Financial Consumer Organization (FCO) – as recommended in 1998 by the MacKay Task Force, and the House Finance and Senate Banking committees. Click here to see details about how to create the FCO and how the FCO would empower financial consumers.
In addition, the federal government can require the Big Banks and the largest publicly traded companies to promote in their mailings and emails to individual investors that they can join an independent, citizen-run Individual Investor Organization (IIO – as recommended by an Ontario legislative committee in 2006). Click here to see details about how to create the IIO and how the IIO would empower individual investors.
For more information, see Democracy Watch’s
Bank Accountability Campaign
