Huge Changes to Canadian Banking in 2024: What You Need to Know

In a groundbreaking move, the federal government greenlit RBC’s monumental $13.5-billion acquisition of HSBC Canada in the waning days of 2023. This move, despite stirring concerns among critics about potential competition stifling, is set to reshape the Canadian banking landscape in 2024. As the acquisition inches closer to finalization in the first quarter of the upcoming year, banking customers can anticipate a wave of changes.

Open Banking Revolution

The federal government, as outlined in its fall economic statement, is poised to introduce legislation in the 2024 budget, paving the way for an open banking framework. Dubbed ‘consumer-driven banking,’ this initiative aims to streamline the sharing of financial data between Canadians and small businesses across various services, including cutting-edge budgeting apps.

Imagine a financial landscape where a customer effortlessly consolidates multiple bank accounts into a single, user-friendly interface. This revolutionary approach not only simplifies account management but also facilitates the seamless addition and management of no-cost accounts and other financial products. Drawing inspiration from the UK, where consumers can instruct their bank to transfer their account to a competitor, Canada is poised to embrace a new era of financial flexibility.

Big Changes Coming to Canadian Banking in 2024

Unifying Banking Complaints

Addressing a longstanding concern of consumer advocates, the federal government has committed to reinstating a single banking ombudsperson. This move aims to streamline complaint resolution by removing the current option for banks to cherry-pick their preferred service. As of November 1, 2024, the Ombudsman for Banking Services and Investments will wield jurisdiction over all banking complaints, marking a significant step toward a more transparent and consumer-centric banking sector.

However, critics, including Democracy Watch, have voiced discontent over the government’s failure to empower the ombuds with the authority to impose binding arbitration on its decisions, highlighting a potential gap in the effectiveness of this regulatory measure.

Revolutionizing Payments: A Need for Speed

Payments Canada, the non-profit organization overseeing the country’s payments infrastructure, has long been working towards implementing near-instant payment clearing. While initially promised in 2019, the system’s launch has faced multiple delays, with the latest update suggesting a first-quarter review in 2024. If successful, this advancement promises immediate credit card payments, eliminating the current delays experienced during weekends and holidays.

Battling Predatory Lending

In response to growing concerns about predatory lending practices, the government took decisive action in the 2023 budget. Lower caps on interest rates were imposed, reducing the maximum annual percentage rate (APR) from 47% to 35%. Further consultations were initiated in October, seeking public input on additional protections against predatory lending.

While TD Bank and Canada Post attempted to address this issue with an alternative lending service in 2022, challenges led to a temporary pause. The government’s plans for 2024 in this domain remain uncertain, leaving room for potential groundbreaking solutions to combat predatory lending.

Future Prospects: Price Reviews on Hold

Notably absent from the 2024 agenda is progress on enhancing the powers of the Financial Consumer Agency of Canada to review bank prices. Despite commitments to scrutinize fees such as non-sufficient fund charges and expanding access to low-cost and no-cost accounts, the government has yet to fulfill its promise of comprehensive price reviews.

In conclusion, 2024 is poised to be a transformative year for Canadian banking. The RBC-HSBC acquisition sets the stage for significant industry shifts, from the advent of open banking to measures against predatory lending. As the financial landscape evolves, Canadians can anticipate a more interconnected, transparent, and consumer-friendly banking experience.