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by Craig Wong and Ian Bickis
OTTAWA — Ottawa plans to make it easier for Canadians to move their banking and investment accounts in a bid to increase competition and reduce costs for consumers.
The government said as part of Tuesday’s federal budget it will move to eliminate investment and registered account transfer fees, which it said cost Canadians on average $150 per account.
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It also said it intends to work with banks on ways to simplify the process of switching primary chequing accounts to other Canadian financial institutions.
“We will introduce measures to enhance competition across the economy – starting with the financial and telecommunications sectors,” said Finance Minister François-Philippe Champagne in the prepared text of his budget speech.
The moves should offer a boost to fintech companies looking to challenge the dominance of Canada’s big banks, which hold a commanding share of the market.
Several companies have been working to offer alternatives.
Questrade Financial Group, best known for its online trading platform, said this week that it has secured regulatory approval to launch Questbank.
Meanwhile, Wealthsimple, which has been expanding its offerings to include chequing accounts, credit cards and mortgages, said recently its assets under administration have grown to more than $100 billion.
Michael Katchen, head of Wealthsimple, said the budget delivered many wins for Canadians, including the plan to ban transfer fees.
“By standing up for ordinary investors and removing this barrier to choice, the government is taking exactly the kind of bold action we need to unlock real competition in financial services,” he said in a statement.
Bank of Canada senior deputy governor Carolyn Rogers made the case for more competition in the banking sector in a speech last month.
She said the concentration of Canada’s banking sector is often cited as one of the main factors contributing to its stability, however she added that many argue that this level of concentration has clear negative impacts on productivity, innovation, capital allocation, cost and consumer choice.
The Canadian Bankers Association said in a statement that Canada has a highly competitive financial services sector with a large number of competitors and product offerings across Canada.
Spokeswoman Nathalie Bergeron said the CBA looks forward to working with the government as it engages with industry on its budget initiatives.
Among them is moving forward on an open banking framework that could see consumers take more control over their own financial data, making it easier to switch banks.
While open banking is yet to launch in Canada, the government has promised in the budget to expand it further by mid-2027 to allow the sending of payments through the system.
And to make the system a reality, the federal government said it is shifting responsibility for implementation of open banking to the Bank of Canada, from the Financial Consumer Agency of Canada.
Adriana Vega, head of industry group Fintechs Canada, said in a statement the government had delivered a bold and clear path forward for the sector.
“The financial sector is the heart of any modern economy,” said Vega.
“That’s why we are thrilled that the government has made it a key focus as a means to make life more affordable for Canadians and boost productivity.”
Also in the budget Tuesday, the government said it will review fees charged by banks and other federally regulated financial institutions, including Interac e-transfer and ATM fees.
The government said it will also work with banks to bring more transparency to fees around sending money abroad.
The budget will also change the Bank Act to increase the amount immediately available when someone deposits a cheque to $150 from $100 and look to reduce the number of days banks may hold deposited cheque funds before releasing them.
The changes in the financial sector come after Canadians already saw a cut to the income tax rate for the lowest bracket that came into effect on July 1. The tax cut is expected to mean savings of up to $420 per person a year in 2026.
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