Remarks by the Commissioner of the Financial Consumer Agency of Canada at the Standing Committee on Finance regarding the Guideline on Existing Consumer Mortgage Loans in Exceptional Circumstances

Ottawa, Ontario – February 13, 2024

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Thank you, Mr. Chair, for the introduction, and to the Committee for inviting us to appear before you today.

I am joined by Frank Lofranco, Deputy Commissioner of Supervision and Enforcement, at the Financial Consumer Agency of Canada.

For those less familiar with our mandate, FCAC is an independent federal agency that was established in 2001 to protect the rights and interests of consumers of financial products and services.

We work in close collaboration with our federal partners, including the Office of the Superintendent of Financial Institutions, the Canada Deposit Insurance Corporation, the Bank of Canada, and the Department of Finance. We coordinate our activities on matters relating to financial stability, systemic vulnerabilities, and the supervision of federally regulated financial institutions. 

FCAC carries out its mandate in 2 principal ways.

First, as a regulator, we supervise the compliance of federally regulated financial entities, primarily banks, with consumer protection measures set out in legislation, public commitments, and codes of conduct.

Second, FCAC is mandated to strengthen the financial literacy of Canadians. We do this in various ways, including educating Canadians about their rights and responsibilities when dealing with financial institutions. We also conduct research and monitor trends and emerging issues that affect financial consumers.

We welcome this opportunity to engage with the Committee on FCAC’s work relative to the important topic of housing financing. The impact of housing costs on household finances and the vulnerability of mortgage holders in todays’ economic environment are issues that we are keenly aware of and that relate to both sides of our mandate.

Before responding to your questions, I would like to highlight a couple of areas of our work relating to housing finances.

On the regulatory side, the consumer protection measures we oversee apply to a range of products and services, including residential mortgages offered by banks. 

Those measures were strengthened in 2022 when the Financial Consumer Protection Framework took effect. The new Framework reflects a focus on outcomes that puts more onus on the industry to responsibly manage how and what they sell to consumers and how they respond when disputes occur. 

One example of the Framework in action is the Guideline on Existing Consumer Mortgage Loans in Exceptional Circumstances that FCAC issued last July. Guidelines are a supervision tool that provide industry with clarity regarding FCAC’s expectations for complying with their regulatory obligations.

Specifically, this Guideline sets out our expectations that, in response to the current exceptional economic circumstances, financial institutions will adopt fair and consistent approaches when they offer relief measures to consumers who are at risk of defaulting on their mortgage for their principal residence.

Importantly, the Guideline is based on best practices in financial consumer protection and centred around the principles of fairness, appropriateness and accessibility, which are also reflected in the new Framework.

FCAC’s Guideline was also informed by our internal research, demonstrating how the 2 sides of our mandate work together.

Since 2020, we have been conducting a monthly survey to track the financial well-being of Canadians. There is an abundance of great information in this data that we release publicly and share with other researchers.

We have added questions related to housing finance in response to the challenges of the current environment. A key finding is that homeowners with a mortgage have been increasingly at risk of experiencing financial hardships, such as having to borrow for daily expenses or draw on savings.

It was in response to such findings that FCAC acted and issued its mortgage guideline. 

In addition, we continue to increase our educational efforts. We have developed new information related to mortgage relief measures and how consumers can make informed decisions around mortgage financing. The theme of last November’s Financial Literacy Month, for example, was focused on managing debt. 

And,  FCAC recently launched a national, multi-media advertising campaign that promotes FCAC’s tools and resources related to renting or buying a home and choosing, renewing, and paying for a mortgage.

Mr. Chair, that concludes my opening remarks. I look forward to taking the Committee’s questions.