The changing consumer protection landscape in Canada

October 9, 2018 | BY SHANNON Q

In May, the Financial Consumer Agency of Canada (FCAC) released its Report on Best Practices in Financial Consumer Protection, to update the country’s financial consumer protection framework. We interviewed Senior Legal Counsel James Archer to share his insight on the current state of play.

Q: Help us understand how the consumer protection regulatory environment is changing in Canada.

James Archer: The federal government started looking hard at financial consumer products around the year 2000 when they came out with consumer regulations. Then, with the financial crisis in 2008, we saw stronger consumer protections laws coming out of the United States. Our federal government started to tighten up on market practices and disclosure requirements. Also, we’ve seen a patchwork develop over the last eight or nine years. Ottawa is now trying to simplify things by bringing it all together in a single legislative framework. And so they undertook that back in 2016, but the difficulty is that there are inconsistencies between the provinces.

Q: How so?

JA: The banks had run into problems with class action lawsuits in Quebec, which has strict consumer protection laws. There was a group of cases brought against the banks for non-disclosure of foreign exchange fees on credit cards. The question was whether the federal regime prevails, or does provincial law have anything to say about it? The class action litigants won those cases, and so the feds decided that they need to beef up their regime for it to become a more comprehensive and all-encompassing framework. That way the banks could operate under a federal regime without fear of inviting class action lawsuits and having to comply with provincial law, which was not consistent with the national nature of the banking system. But when they introduced it in 2016, the Quebec government complained that some of those standards didn’t meet Quebec standards. So then they undertook a research project, which I worked on, and this year they produced a report, which identified a number of best practices. With that, we expect they are going to develop a final framework, which will involve amending the Bank Act. The hope is that we get a comprehensive, uniform, national regime for banks who market and sell financial products.

Q: Will that satisfy the provinces?

JA: Quebec is likely going to remain an issue because of the larger variance between its laws and those in the rest of Canada. It’s always going to be a bit of an outlier, and I expect class actions are more likely to be brought against the banks there. But I don’t think there’s much appetite, particularly the federal level, to step back from that position and weaken protections for consumers. Also, the provincial government in Quebec has been very strong on consumer protection, so I can’t see Canada reversing that momentum.

Q: We’re seeing the current U.S. administration backing off consumer protection regulations. Could we expect to see the same here?

JA: I don’t think so. The Americans led the charge on consumer protection after the financial and mortgage collapses initially, and a lot of what found its way into Canadian legislation was to some extent influenced by what was happening in the United States.

Q: What is it that your clients need to be thinking in the current environment?

JA: Market practices is probably one area over which the federal government is going to have more control – things like the unfair treatment of consumers. They’re going to have to pay more attention to that. There are also major compliance issues that the banks are going to have to deal with because of reporting obligations.  I think to the FCAC. That will be a big job to get all of that together.

Q: What exactly does the job of legal operations director entail?

JA: Legal Ops is responsible for running the business activities of an in-house legal team. This typically involves looking after budgets, vendors, technologies, key initiatives, and processes. Add in strategic planning, communications, data analytics, and knowledge management. It’s fast-paced and no two days are the same. Right now we are more like a start-up, introducing the function, roles, and responsibilities. As the legal ops director, I continually work with leadership, management and our front lines to deliver our Sun Life purpose and achieve our objectives.

Q: And where’s the challenge for you?

JA: Well, it’s a nascent field, so there’s no textbook for us to follow. It would be new to lawyers to work with one team that works with the whole of Legal. In our case, we provide a level of support to Compliance, Corporate Secretary, Government Relations, Regulatory Affairs and Sustainability as well. Because we are one of the few teams that work with the whole department, we are in a unique position to impact in-house legal culture. It’s our biggest challenge and opportunity to drive cultural change in how we operate and deliver legal services.

Q: How do you overcome resistance to change?

JA: Senior leadership has been supportive. They have invested in the role and are supporting our building out the function and team. To overcome change, I’ve focused on relationship building, developing strategy and increasing frequency of communication. People have needed to time get to know me and the skills and experience I bring to the table. Defining what the future could look like has helped as we identify key initiatives and legal/digital strategies. Also important is spending time to include input from employee focus groups, business requirements working groups, technology demos, formal and informal town halls.

Q: Where does process fit in?

JA: A great question, I’d love to say it fits in everywhere but we’ve a long way to go to begin to have a critical mass of process thinkers. Technology is not a panacea and we know we have to pay more attention to process design. The tension between having technology and getting the most out of the tech is often a lack of process understanding, design, and training. We are starting to pay more attention to the relationship between process, people and technology. I believe that kind of attention will lead to better outcomes.

Q: Where do you draw inspiration in developing this expertise in legal ops?

JA: I reach out to my networks, like the ACC or the Corporate Legal Operations Consortium (CLOC) for example. I have found folks to be helpful and generous. I’ve spoken with people around the world, most recently in Australia & the UK. It’s an amazing ecosystem where law firms, consulting services, tech vendors and in-house peers somehow all give their time, support, and “how-to-dos” to help each other out. I’ve not seen anything like it and the level of collaboration and support is inspiring.

Q: If you had one piece of advice for external counsel on how to deal with a modernizing legal department, what would it be?

JA: No one’s in their comfort zone anymore. In-house counsel’s role is no longer only about legal issues and identifying risk. The role is evolving and changing into providing solutions to our business partners. In addition, legal practice or those tasks that lawyers should perform and legal delivery or the business of law is also a new dimension that is expanding as legal teams modernize. My advice for external counsel would be to appreciate the duality of the in-house role both as business partners and legal advisors and bring forward opportunities that improve problem-solving for all of legal delivery.

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