Tuesday, March 8, 2011

New 'consumer-friendly' rules announced for banks

New 'consumer-friendly' rules announced for banks

Minister of State for Finance Ted Menzies speaks to the media about new banking regulations, in Toronto, Tuesday, March 8, 2011.

CTV.ca News Staff

Date: Tue. Mar. 8 2011 11:27 AM ET

Canadian banks will face more restrictions on how they handle their customers' money, under new "consumer-friendly" measures announced by the government on Tuesday.

Ted Menzies, minister of state for finance, made the announcement in Toronto.

The proposed new regulations would reduce the amount of time banks can hold onto funds before clearing a cheque, to a maximum of three a day. And customers would have immediate access to the first $100 of the deposit, Menzies said.

The new rules would also eliminate so-called negative option billing, a practice where customers are automatically billed for a service or product, unless they proactively opt out ahead of time.

"The proposed negative option billing regulations would require federally regulated financial institutions to ask consumers for their consent before providing a new product or service," Menzies said.

The changes are designed to make banking easier and more "consumer friendly" in order to discourage Canadians from using cheque-cashing services, which often charge high fees and operate with little regulation.

He said low-income Canadians without significant bank balances, younger Canadians and those who receive cheques from less established employers or clients, often face major hurdles in order to access their own money.

"These people are often subject to longer cheque holding periods, yet these are often the Canadians who most need quick access to their funds," Menzies said.