<\/p>\n
(August 2025)<\/p>\n
Both watchdogs too weak in powers, and enforcement attitude, to protect financial consumers and investors<\/strong><\/p>\n The federal government\u2019s Financial Consumer Agency of Canada (FCAC) has a very weak enforcement record since it was created in 2003.<\/p>\n It has made only 145 compliance rulings<\/a>, is prohibited from naming a law-violating bank unless it prosecutes the bank, and it has only prosecuted 2 banks<\/a> (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.<\/p>\n According to an article by Reuters in March 2017<\/a>, and Democracy Watch\u2019s research of fines imposed since then, the FCAC has issued fines totaling just $20 million since 2001 in the 145 rulings<\/a> it has issued.<\/p>\n In contrast, since 2013 when it was created until the end of 2024, Britain\u2019s Financial Conduct Authority (FCA) issued penalties totalling 4.764 pounds ($8.86 billion Can.<\/a>), and since 2011 when it was created up to January 2025, the U.S. Consumer Financial Protection Bureau (CFPB) imposed penalties totalling $24.7 billion U.S. ($34.1 billion Can.<\/a>).<\/p>\n Key consumer protection rules need to be strengthened, and the FCAC must be required to do 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 hasn\u2019t done unannounced audits since 2005, tipped off the banks in March 2017<\/a> about the audit they did through the rest of 2017 on abuses, and then allowed the banks to see the draft audit results<\/a> and suggest changes that weakened the report.<\/p>\n Meanwhile, former Finance Minister Jim Flaherty, and former Finance Minister Bill Morneau, did nothing, and current Finance Minister Chrystia Freeland moved as slowly as possible to require TD, Royal, Scotiabank or National Bank to stop using their own complaint judges and return to the Ombudsman for Banking Services and Investments (OBSI — which finally happened in November 2024<\/a>).<\/p>\n All banks and investment companies should be required to use OBSI, and allow financial consumers and investors to complain directly to OBSI without having to go through a financial institution\u2019s internal complaint system, and OBSI\u2019s rulings on complaints by bank customers and investors must be made binding in every case.<\/p>\n An FCAC report released in February 2020<\/a> showed that the banks have a horrible record<\/a> of dealing with financial consumer and investor complaints, especially the banks that use their own complaint judges.<\/p>\n And while the maximum fine allowed under the Bank Act<\/i> was finally increased in 2018 to the meaningful penalty of $50 million, it is very unlikely the FCAC or a court will ever impose the maximum fine so they must be required to impose a minimum fine of at least $1 million for each violation, and a sliding scale of required penalties for more serious violations up to the $50 million maximum fine for the most serious, systemic violations.<\/p>\n 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.<\/p>\n Finally, to ensure the FCAC and OBSI do their jobs properly, and to ensure that financial consumers and investors have help when complaining to the FCAC and OBSI, 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 \u2013 as recommended in 1998 by the MacKay Task Force, and the House Finance and Senate Banking committees) so consumers have a place to call for help if they are gouged or treated unfairly, and to get fully independent, expert advice (See details at: https:\/\/democracywatch.ca\/question-and-answers-about-the-proposed-financial-consumer-organization\/<\/a>). Also, banks and the largest mutual fund companies must be required to promote in their mailings and emails to customers that they can join an independent, consumer-run Individual Investor Organization (IIO \u2013 as recommended by an Ontario legislative committee in 2006) so they have have a place to call for help if they are ripped off or treated unfairly, and to get fully independent, expert advice (See details at: https:\/\/democracywatch.ca\/question-and-answers-about-individual-investor-organization-iio\/<\/a>).<\/p>\n