Canada’s Competition Bureau makes recommendations for financial sector

Canada’s Competition Bureau has recommended that the Department of Finance “swiftly adopt” an Open Banking framework to improve competitiveness in the financial sector.

The recommendation is part of Competition Bureau Canada’s submission in response to the Department of Finance’s public consultation on strengthening competition in the financial sector.

Among the questions posed that the consultation sought to answer were: what are the existing barriers Canadian consumers face in accessing banking services, and what measures to encourage competition could also support jobs in Canada’s financial sector?

The Competition Bureau’s submission seeks to answer the Department of Finance’s key questions about bank mergers, market concentration, and public reporting on concentration and competition in Canada’s banking sector.

In doing so, it makes two recommendations that will lower switching costs for consumers and “meaningfully” advance competition.

The first of these is the adoption of “a consumer-driven banking framework that will boost competition and innovation by challenging established providers and enabling new service providers”.

The Competition Bureau’s second recommendation is that policymakers “reconsider the application of the stress test at mortgage renewal for uninsured borrowers”.

Matthew Boswell, Commissioner of Competition, said: “This consultation provided an ideal opportunity to recognize the importance of competition in the financial sector.

“We urge policymakers to prioritize and foster pro-competitive measures to help tackle ongoing concerns around affordability and productivity in the Canadian economy.”

On LinkedIn, Independent Senator Colin Deacon wrote: “These policy options are both very fit for the moment and one, Open Banking, has already been prioritized by the Minister in her Fall Economic Statement and when testifying in the Senate.

“But the Bureau goes further, providing Finance Canada with ways to measure and monitor whether competition is actually improving in the financial sector.”

Earlier this week, the House of Commons voted to pass a second reading of Conservative MP Ryan Williams’ Bill C-365, which will accelerate the implementation of a consumer-led banking system for Canadians.