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Vass Bednar: Canada’s Glaring Banking Protections Gap and Implications for Consumers and Fintechs

Regulatory Insight | Aug 7, 2023

consumer protection  - Vass Bednar:  Canada's Glaring Banking Protections Gap and Implications for Consumers and Fintechs

In an op-ed by Vass Bednar, a glaring gap in banking protections for Canadians was highlighted, with potential adverse implications for consumers and the fintech industry.

Inconsistent Consumer Protections

  • The financial sector currently has inconsistent consumer protection across the provinces, creating a complex and vulnerable framework that is not equipped to handle the evolving financial landscape.
  • Changing landscape vs traditional Bank Act:  The financial sector has traditionally been regulated under the Bank Act, which was sufficient when only licensed banks provided all financial or bank-like activity. However, the emergence of numerous complementary players in the financial sector, including fintech companies, has complicated this regulatory landscape.

See:  FCAC Survey Results: Understanding the Canadian Consumer’s Perspective on Open Banking

  • One of the key issues is the liability associated with Interac Corp.’s e-transfer system. Over the past five years, the gap in consumer protection has become more problematic due to the rise in cybercrime and the sophistication of digital scams. Consumers are often left to independently recover funds that they may have sent through Interac, creating a significant burden.
  • The current consumer protection legislation, which is handled by the provinces and territories, extends to many non-bank players in payments. However, the federal government's Retail Payment Activities Act does not include explicit consumer protection clauses, possibly to avoid infringing on the provinces' jurisdiction. This has resulted in a fragmented governance framework that relies on a mishmash of commercial contracts and laws.

House of Cards to Fraud and Scams

  • This gap in consumer protection has serious implications. It weakens the foundation of our financial system and exposes consumers to potential financial losses due to fraud and scams.

Read: FinTech Executives Disappointed with Budget 2023’s Lack of Open Banking Update, Raising Doubts on Delivery Timeline

  • Furthermore, it hampers the ability to capture transparent information about instances of fraud and scams, which is crucial for improving cybersecurity, public education, and other protective measures.

Critical Issue to be Addressed


NCFA Jan 2018 resize - Vass Bednar:  Canada's Glaring Banking Protections Gap and Implications for Consumers and FintechsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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