In 2018, the Canadian federal government passed Bill C-86, Budget Implementation Act, 2018 to address the findings of a Financial Consumer Agency of Canada (FCAC) report. This legislation contains sweeping consumer protection provisions that must be implemented by Canadian banks.

The report, “Domestic Bank Retail Sales Practices Review,” outlined five findings and conclusions of the FCAC’s review of Canada’s six largest banks and their retail banking sales practices:

• Retail banking culture is predominantly focused on selling products and services, increasing the risk that consumers’ interests are not always given the appropriate priority;
• Performance management programs may increase the risk of mis-selling and breaching market conduct obligations;
• Certain products, business practices and distribution channels present higher sales practices risk;
• Governance frameworks do not manage sales practices risk effectively; and
• Controls to mitigate the risks associated with sales practices are underdeveloped.​

Bill C-86: Six Key Areas of Focus

Financial institutions must now recalibrate their reputation and regulatory risk assessments in the following six areas:

1. Corporate Governance: Banks must designate an independent board committee with duties that include requiring the establishment of procedures for compliance with consumer provisions, reviewing procedures for appropriateness for compliance, and requiring management to report at least once a year to the committee on the implementation of these procedures and other activities related to consumer protection.
2. Fair and Equitable Dealings: This area sets out the rules related to responsible Business Conduct, and includes provisions dealing with access to basic banking, credit, prepaid and options products. Banks must ensure that officers and employees in Canada and any person who offers or sells the bank’s products or services in Canada are trained with respect to the bank’s policies and procedures.
3. Disclosure and Transparency: Key product information must be disclosed in language that is clear, simple and not misleading.
4. Enhanced Complaints Handling: Banks are required to establish complaint handling procedures, wherein a complaint can include any expression of dissatisfaction with respect to a product or service in Canada that is offered, sold or provided by the institution, whether justified or not.
5. Redress​: Banks will be required to provide a credit or refund for changes or penalties not been disclosed or consented to by customers​.
6. Whistleblowing​: A new whistleblowing regime is proposed to report “wrongdoing” y any employee of the bank. The bank must also implement policies and procedures for dealing with wrongdoing matters reported to the bank and prohibiting the bank from taking action against employees who report the wrongdoing.

Bill C-86 Poses Technological Challenges to Banks

As banks scramble to address all the legislative mandates, two specific actions of note under responsible business conduct are particularly difficult to automate:

• Banks must send an electronic alert to consumers if their personal deposit or credit account is below an amount prescribed by the person. If no amount is set, the alert would be sent if the balance falls below $100.
• Banks must notify consumers in advance of when offers they are enrolled in are set to expire.

On paper, responding to both of these sections should not be challenging. However, for most banks that fall under Bill C-86, supporting the accompanying workflows to meet these requirements with their legacy technology systems is challenging. It also requires a significant amount of manual intervention, resources, and investment.

Bankers’ must pivot from one system to another to keep track of an individual customer’s products, services and preferences. This sporadic process adds a burden that is magnified because banks must manage and track each customers’ threshold amount but also communicate to them when they go below in real-time and in the customers’ preferred channel.

Banks must also know what offers and promotions were extended when and to which customers. However, it’s usually difficult for banks to house and monitor comprehensive details of all promotions and offers across all their deposit and lending products, with associated accounts and expiry dates. As a result, responding to this requirement can be difficult to implement.

What happens if banks fail to adhere to Bill C-86?

Complying with Bill C-86 is a major undertaking for most banks, but not complying with it runs serious risks, which include:

• Stronger penalties: The maximum penalty for a violation is now CAD10 million, a marked increase from the previous maximum penalty of CAD500,000. The maximum penalty for natural persons is CAD1 million, which is a marked increase from the previous maximum penalty of CAD50,000.
• Reputational risk: The Commissioner will be required make public the nature of the violation, to name the person who committed a violation, and disclose the penalty amount imposed.
• New special audit rights: Banks may undergo audits if it is determined to be required to administer the FCAC Act and the consumer provisions.

The Zafin Advantage

Financial institutions in Canada have a mammoth task ahead of them to meet all the provisions set forth in Bill C-86 by mid 2022. Zafin is already actively supporting Canadian banks that are making changes to their processes and systems to be Bill C-86 compliant by next year.

Zafin’s cloud-native SaaS product and pricing platform acts as the cross-product layer sitting on top of core systems of record enabling banks to view an entire 360-degree view of customers in order to deliver on Bill C-86’s requirements. In addition, Zafin’s platform can also help banks differentiate themselves by launching new relationship banking strategies and offers more rapidly.

With Zafin’s out-of-the-box SaaS solution, banks can proactively send real-time electronic alerts to consumers as required by Bill C-86. That includes sending real-time alerts to a customer as soon as their account balance falls below any amount they set. It also allows banks to alert customers before product renewals or when an offer is about to expire (21 days and 5 days prior to their end dates). Furthermore, Zafin’s platform also helps banks launch new cross product offers and promotions rapidly to provide more relevant offers for customers that grow revenue and loyalty.

The best part? With Zafin, your bank can implement the solution to meet these notification requirements in as little as three months, depending on the integration pattern supported by the bank. Your bank need not devote months of time, energy, in-house resources and money to build out the processes and systems you require from scratch.

We’re here to help. Want to learn more? Speak to a technical expert today.