The eight major banks and the smaller banks that are members of the Canadian Bankers Association have made voluntary commitments to provide consumers helpful information when they are shopping for a residential mortgage loan, providing a power of attorney (POA) over their accounts or opening a joint deposit account (JDA). The commitments appear directed at two particular concerns with the Canadian market, the level of consumer debt and the aging population. Voluntary commitments have some regulatory status as the Financial Consumer Agency of Canada is required to monitor their implementation and may conduct a review of the progress that a bank has made in implementing the commitment.
In respect of residential mortgages, the banks committed to provide both general information about mortgages and mortgage security as well as information specific to the loan provided to a particular borrower. More particularly, consumers will be provided with general comparative information to assist them to understand the differences between the types of security taken by a bank for collateral charge mortgages and conventional charge mortgages, including information about transferring or assigning the mortgage security to a new lender, borrowing additional funds, and discharging the mortgage security. Borrowers will also be provided information about the security for their specific mortgage loan, again, related to transferring or assigning the mortgage security to a new lender, borrowing additional funds, and discharging the mortgage security.
A bank may provide consumers with its own unique version of the general information, or may provide links to the information found on the websites of the Canadian Bankers Association or the Financial Consumer Agency of Canada.
For POAs, the banks’ commitments include not requiring that a customer use a bank form of POA and informing the customer that the use a bank standard form POA may have other legal implications for the customer. The banks will also permit changes to POAs provided that the customer is still competent. If a bank refuses to act on a POA, the bank will provide the customer with information about their recourse, including how to access the bank’s dispute resolution process.
The banks will provide a warning to customers about the use of a JDA, including warnings about the ability of the joint accountholder to access the account and for creditors of the joint accountholder to make a claim against the proceeds of the account. Again, the banks will be able to satisfy this commitment by providing customers with a copy of What every older Canadian should know about Powers of Attorney (for financial matters and property) and Joint Bank Accounts, produced by the Federal/Provincial/Territorial Ministers Responsible for Seniors.
The commitments will be phased in first on the banks’ websites and then in their branches and other points of service. The banks have until January 31, 2015 to disclose the information about specific mortgages
Information about the commitments may be found on the Department of Finance Canada website by clicking here.