The feds wants fewer banking fees, more help for mortgage holders


What is the Government of Canada proposing?

Minister Freeland’s proposal tackles four areas: mortgages, bank account fees, junk fees and dispute resolution. Junk fees include as the cost Canadians pay for non-sufficient funds (NSF), overdraft protection, debit transactions and Interac e-Transfers. Here’s how:

New mortgage guideline for banks

In early October, Minister Freeland met with the CEOs of Canada’s largest banks to discuss the government’s new mortgage guideline, issued by the FCAC, that asks banks to proactively assist Canadian mortgage-holders who are struggling to meet rising costs. In particular, the guideline focuses on home owners who are at risk of defaulting on their mortgage. 

The guideline asks that banks identify consumers who are at risk and explore assistance in the form of fee waivers, no-cost financial education, lengthened mortgage amortization periods and mortgage relief measures.

Eliminating some bank account and junk fees

The government has tasked the FCAC with “setting expectations” for banks to provide free or low-cost banking options and with “encouraging” them to remove junk charges. 

Although there are numerous no-fee bank accounts available to Canadians, they are typically online-only. For chequing accounts at a Big Six bank, costs can range from $4 to $40 monthly, with extra charges of around $1 to $1.50 for Interac e-Transfers, over limit transactions, and out-of-network ATM use. Penalties for non-sufficient funds can be a whopping $45 to $50. Currently, the big banks offer low- or no-cost options to youth, students and seniors, and Freeland is hoping to expand eligibility to even more Canadians.

Resolving disputes with banks

In a 2020 report, the FCAC identified dispute resolution as a problem for Canadian banking customers, noting that allowing banks to choose between two separate complaint bodies—the Ombudsman for Banking Services and Investments (OBSI) and the ADR Chambers Banking Ombuds Office (ADRBO)—created inefficiencies and delays. So, another government measure seeks to remedy this by designating the OBSI, an independent and transparent non-profit, as the sole complaints body for banking.  

Why is the federal government taking these steps? 

The housing crisis, the rising costs of living and high interest rates are putting enormous financial pressure on Canadians, many of whom are taking on debt just to get by.  

According to the government press release, these measures are intended to “ensure Canadians are treated fairly by their banks,” to make life more affordable and to reduce inflation. Additionally, they are intended to guard against the dangers of the current Canadian housing market by taking action now to avoid mass foreclosures in the future.

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