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The corner of Bay Street and Adelaide streets in the heart of Toronto’s financial district. (Gloria Nieto/The Globe and Mail)
The corner of Bay Street and Adelaide streets in the heart of Toronto’s financial district. (Gloria Nieto/The Globe and Mail)

Eight banks agree to no-cost accounts for low-income clients Add to ...

The Conservative government has secured a pledge from Canada’s largest banks to offer no-cost banking accounts for an estimated seven million youth, students and low-income seniors.

Finance Minister Joe Oliver will make the announcement Tuesday at an Ottawa seniors centre, The Globe and Mail has learned.

Canada’s eight largest banks have agreed to voluntarily adopt new rules starting next year that would offer no-cost accounts for low-income senior Canadians that would allow at least 12 debit transactions per month.

The definition of low income would be tied to the existing rules for the Guaranteed Income Supplement, which was paid in 2013 to seniors with incomes under $20,204 (a figure that does not include Old Age Security benefits).

A move in this direction was first hinted at in the October Speech from the Throne. The promise was repeated in the government’s February budget.

The announcement is also expected to include measures to waive extra fees related to deposits, debit cards, monthly printed statements and cheque-writing privileges.

The government is also pledging that all Canadians could receive that same level of service in a “low-cost” plan for $4 a month.

The government has been making a series of consumer-focused announcements lately that are targeted on improving financial literacy. In April, the government named its first financial literacy leader, Jane Rooney. That position is expected to be an advocate for clear reporting of private-sector fees and will publish tips for Canadians on how to manage personal expenses and credit cards.

The government is also working on a proposed financial consumer protection framework and recently posted feedback online.

As part of the framework, the government is proposing a “Consumer Code” that would streamline the existing laws and regulations related to consumer protection.

In its submission as part of the consultations on the framework, the Canadian Bankers Association said it believes in fair treatment of the consumer, but expressed some concern with the government’s direction.

“We are concerned about any proposed fundamental shift in policy direction, moving from the current approach where the expectations on banks are clear and implementable to regulating ‘fair treatment of the consumer,’” the CBA said in its submission to the Finance Department. “The experience of other jurisdictions leads us to conclude that regulating ‘fairness,’ while noble in principle, can lead to a series of unintended negative consequences for both consumers and banks – because regulating ‘fairness’ is subject to ambiguity and ongoing interpretation.”

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