The Bank Act is the federal legislation (or law) that governs how banks operate in Canada. First established in 1871, the Bank Act is reviewed periodically to ensure it keeps pace with the rapidly evolving marketplace while continuing to foster stability for the benefit of the Canadian economy.
The full Act can be found on the Department of Justice Canada’s website and there are many regulations detailing the specific requirements under the Bank Act including consumer provisions such as Access to Basic Banking Services Regulations, Access to Funds Regulations, and Complaints Regulations.
Bank Act Review 2019
The next review of the Bank Act is scheduled for completion in 2019* but work is already underway on the first round of consultations. The Canadian Bankers Association is actively participating in the review on behalf of the banking industry and, in response to the federal government’s first consultation document, the CBA prepared a submission identifying priorities that support the government’s stated policy objectives of stability, efficiency and utility, while also positioning the financial sector for the future:
- The Regulatory Landscape for Canadian Banks: The financial sector regulatory framework must strike the right balance between efficiency and stability. To do so, the review must be sufficiently comprehensive so as to consider all regulatory agencies that impact the financial sector.
- Canada’s National Banking System: The stability and efficiency of Canada’s financial sector is rooted in prudent management by banks, which is overseen by a strong national regulatory system. The federal government must continue to protect and enhance its jurisdiction and role in financial services regulation.
- Innovation in Financial Services: Banks support a competitive and innovative financial services sector. The objective of innovation needs to be balanced with a smart regulatory framework that protects consumers and supports the continued strength of Canada’s financial system. Consideration should be given to adjusting regulatory requirements to facilitate greater innovation while still protecting consumers.
- Supporting Innovation by Reforming the Existing Framework: A stable, efficient and useful Canadian financial sector can only be fully realized with a regulatory framework that accommodates and encourages innovation and competition. To achieve this, the existing framework must be reformed to permit financial institutions to fully engage in financial technology activity, invest in and enter into commercial relationships with fintech companies and promote further innovation.
- Modernizing Financial Services Legislation: Canadians are rapidly adopting new and more convenient means of conducting their banking. In order to remain a useful and efficient regulatory framework, the Bank Act and other financial services legislation and regulations must be modernized to keep pace with innovations in financial services and the needs and expectations of consumers.
The CBA will continue to consult with the government as this review moves forward.
* The 2016 Federal Budget extended the sunset clause on the existing Bank Act by two years. While the last Bank Act review was in 2012, the latest review will be completed by 2019.