MortgageBroker mbabc.ca winter 2014 | 27
FCACdecision
THE FINANCIAL CONSUMER AGENCY
OF CANADA (FCAC) released a decision on
November 27, 2013, in which it fined a bank a
whopping $225,000 for failing to comply with
the cost-of-credit disclosure requirements
set out in the Cost of Borrower Regulations in
relation to credit cards.
e FCAC said it received numerous
complaints, beginning in December of 2010,
about misleading disclosure concerning the
bank's credit card statements. ese complaints
prompted an investigation culminating in a
final investigation report in December, 2012.
e bank confirmed that the disclosure
problems stemmed from its implementation of
new requirements set out in the Credit Business
Practice Regulations, which came into force in
2010. ese new requirements are significant
in that they require federally regulated
institutions to provide a minimum 21-day
grace period without interest on all purchases
paid by credit card, provided that the customer
pays the outstanding balance in full by the due
date. Prior to this change, credit card issuers
could determine their own grace periods.
Although the bank changed its systems to
comply with the new regulations by providing
an interest-free grace period for all credit card
purchases during a billing period, it did not
accurately disclose these changes in its initial
disclosure statement. e FCAC commissioner
concluded that the inaccurate disclosure
resulted in consumers lacking the requisite
information to understand their true interest
calculations and credit card balances.
In the decision, she reasoned that, "a central
principle underlying the cost of borrowing
disclosure regime is that consumers should
be in a position to understand how the bank
actually calculates interest on their accounts.
Without this knowledge, consumers will never
be in a position to verify whether the bank
made an error, nor to compare the charges
with those of other financial institutions." n
—Samantha Gale,
MBABC, CEO
Bank Fined for Disclosure Violations
Complaints spark two-year FCAC investigation
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