On May 19, 2016, the Competition Bureau of Canada (the Bureau) launched a market study FinTech in Canada.  The Bureau enforces and administers the Competition Act (Canada) and as part of its mandate participates in activities to promote a competitive marketplace.

The purpose of the study, as described by the Bureau, is to advise and guide financial sector regulators and other relevant authorities on how to ensure that regulation does not unnecessarily impede competition in the sector.

According to the press release issued by the Bureau, the study will focus on how innovation is affecting the way consumers and businesses use financial products and services.  The study will explore the competitive impact that FinTech is having on the industry, barriers to entry faced by companies, and whether there is a need for regulatory reform to promote greater competition while maintaining consumer confidence in the FinTech sector. The study will examine peer-to-peer banking, e-wallet, mobile wallets, mobile payments, crowdfunding and online-based financial advisory services.

Interestingly, both the Department of Finance and the Office of the Superintendent of Financial Institutions, the two government agencies directly responsible for banks and other federally regulated financial institutions, appear to have been taking more of a wait and see approach to FinTech developments.

It is also interesting to note that the Bureau states as one of its fundamental premises for the study that overregulation can restrain competition and impact the efficiency of a market. Most industry observers would probably be confident that they will find plenty of examples of overregulation.

The following are the key questions for the study set out in the Bureau’s market study notice:

  • What has been the impact of technology‑led innovation on the competitive landscape? What is happening to competition? How will innovation impact competition in the future?
  • How will consumers benefit from FinTech?
  • What are the barriers to entry, expansion, or adoption for FinTech companies? Are they regulatory or structural?
  • What is the current state of the regulatory framework for financial services? Does it support or inhibit competition and innovation? Are changes required to encourage greater competition and innovation in the sector?
  • Are the consumer protections in place today enough to adapt for the future? What additional protections should be put in place for consumers? Is there a need for greater transparency in fees?
  • What issues should be considered when developing or amending regulations to ensure competition is not unnecessarily restricted?

Interested stakeholders are invited to make a submission to the Bureau. The Bureau would appreciate receiving submissions and/or indications of willingness to participate in an oral interview with the Bureau before June 30, 2016.