TORONTO – Canadian banks will soon provide customers with more information on the potential risks associated with products and services such as joint bank accounts, collateral mortgages and power of attorneys, federal Finance Minister Joe Oliver announced Wednesday.
General information on these topics was posted on eight bank websites this week, with pamphlets to be made available in bank branches by the end of this year.
The banks have also voluntarily committed to training front-line staff in these areas by end of March.
Oliver said making this type of information easily available will provide an additional level of transparency to those who are not financially literate or unclear on rules governing various financial products available.
“This information will allow consumers to make more informed choices,” he said in making the announcement at the non-profit charity, Credit Canada Debt Solutions.
One example is that some Canadians may not know that they could be put at financial risk if they open a joint account with another person, and that person drains the account.
“Many Canadians, including seniors, put their funds into an account with another person, perhaps a family member or a friend. Yet that other person might use the funds for their own purposes without consent,” said Oliver.
“Furthermore, funds deposited by one person could be at risk of a claim against the other account holder so it’s important that before making a decision to open a joint account, depositors understand the implications of that decision.”
Banks have also pledged to explain the differences between collateral mortgages, ones that use your home as security against your loan, and conventional mortgages to new mortgage customers.
Oliver said some Canadians may not realize that it will be difficult to switch to another lender with a better rate when their collateral mortgage expires, as opposed to a conventional mortgage.
The banks will also have information available about power of attorneys, when it comes to financial matters, he added.
Earlier this year, the banks also signed an agreement with the federal government to provide no-cost bank accounts to youth, seniors, students and those who are on disability or qualify for the guaranteed income supplement. These changes will come into effect in January 2015.