Lenders are expected to play their part in helping consumers, regulator says
Canada’s financial consumer watchdog has warned financial institutions against taking advantage of borrowers in dire straits because of rising interest rates.
The Financial Consumer Agency of Canada’s new guidelines, released today, indicate that lenders should support consumers whose mortgage payments are rising and act in accordance with the principles of fairness, appropriateness and accessibility.
The regulator said specific support should be provided by financial institutions to consumers at risk of defaulting on a mortgage as rising rates continue to put the squeeze on borrowers.
“Today’s economic environment is characterized by high household debt, increased cost of living and higher interest rates,” FCAC said in its release, which did not put forward specific requirements for lenders to meet.
The watchdog reiterated that expectations put in place during the COVID-19 pandemic, such as not charging interest on interest, remained – and said it expected lenders to provide as much support as possible to variable-rate mortgage holders whose rates have surged and fixed-rate borrowers facing challenges upon renewal.
The new recommendations are aimed at “protect[ing] Canadians with mortgages who are experiencing severe financial stress,” FCAC’s commissioner Judith Robertson said in a press release accompanying the news.
