Report of the committee
Tuesday, October 31, 2017
The Standing Senate Committee on Banking, Trade and Commerce has the honour to table its
Your committee, which was authorized by the Senate on Wednesday, January 27, 2016 to examine and report on the present state of the domestic and international financial system, now tables an interim report concerning credit unions and the use of the terms “bank,” “banker” and “banking”.
Over the course of two meetings, the committee heard testimony regarding the Office of the Superintendent of Financial Institutions’ (OSFI) June 2017 advisory about the Bank Act’s prohibition on the use of certain terms by financial service providers that are not federally regulated banks.
Section 983 of the Bank Act restricts the types of entities that can use the terms “bank,” “banker” and “banking” as part of a corporate name or to describe financial products and services. Restricting the use of the term “bank” for the corporate name of a federally regulated bank is reasonable, given the potential for consumer confusion in the evolving financial and fintech services sectors.
However, prohibiting the use of the terms “bank,” “banker” and “banking” as verbs and to describe financial products and services is a concern. For decades, credit unions and caisses populaires have used “bank,” “banker” and “banking” to describe the products and services they offer to their members, and according to the Department of Finance Canada and OSFI, there have been no complaints or other examples of misunderstanding among consumers about the use of these terms by financial service providers that are not federally regulated banks.
Rather than strictly enforcing section 983, we recommend that the Department of Finance Canada and OSFI continue to consult with the credit unions and caisses populaires to develop a reasonable and practical solution that takes into consideration the current use of these terms by financial service providers and the general public, and permit prudentially regulated deposit-taking entities that are supervised at the federal or provincial level to use these words as verbs to describe their financial products and services.
The committee looks forward to examining this provision and any proposed amendments during the next statutory review of the Bank Act and the federal financial sector framework in 2019.