OBSI supports Federal Department of Finance proposals to protect consumers from fraud
On September 11, 2024, the Ombudsman for Banking Services and Investments (OBSI) submitted its response to the Department of Finance’s consultation on Proposals to Strengthen Canada’s Financial Sector.
Sarah Bradley, Ombudsman and CEO of OBSI, emphasized the importance of consumer protection in the financial sector. “As long-time advocates for a fair, effective, and trusted financial services sector, we support the overarching goal of this consultation, particularly its timely focus on consumer protection and how to better protect Canadian consumers and businesses from fraud,” said Ms. Bradley.
In our response, we supported the interrelated policy initiatives the government proposed including:
- Imposing a fraud detection requirement on all banks
- Requiring banks to delay or prevent potentially fraudulent transactions
- Expanding the limited liability system for fraud from credit cards to other banking products
“Because money is generally not recoverable once transferred to criminals, prevention of fraudulent transfers, through consumer education, enhanced detection mechanisms, improved bank product design, improved law enforcement, and cooperation among the service providers whose infrastructure is used to facilitate bank fraud, is essential to reducing the harm caused by these crimes and preserving the confidence of the general public in Canada's banks,” said Ms. Bradley.
OBSI’s submission included data on its experience with bank fraud and numerous case examples to illustrate the nature of the impact of fraud on Canadian consumers. OBSI also acknowledged the significant financial cost of enhanced fraud detection and prevention for federally regulated financial institutions, which will ultimately be passed on to the consumers for whom the protections are being implemented.
In response to the specific questions in the consultation, OBSI’s response primarily focused on questions related to enhancing consumer protections and upholding world class regulation.
The submission also provided OBSI’s views on defining an unauthorized transaction and support for requiring banks to establish system-wide, aggregated data collection relating to frauds and scams.
OBSI also highlighted the importance of harmonization in financial regulations and consumer protection rules between provincial and federal jurisdictions. This includes coordinating periodic announcements on likely forthcoming regulatory actions, establishing a forum for collaboration on international issues, and the sharing of information about security risks.