The federal government is moving forward with a proposed regulation to ensure banks can't hold personal cheques for more than four business days before freeing up the funds, one of several measures announced on Sunday aimed at protecting Canadian consumers.
The move follows a promise made in last year's federal budget.
As of Aug. 1, cheques under $1,500 won't be held more than four days, said Ted Menzies, the minister of state for finance, at the announcement at the Financial Consumer Agency of Canada offices.
The change also ensure that cheques worth less than $100 must be cashed immediately in person or reimbursed the following day if deposited in a bank machine.
Banks also will no longer be able to send out unsolicited credit card cash advances.
The government says confusion is caused by these products because often, card users are unaware that such cheques are treated as cash advances: interest charges start accumulating immediately without the usual grace period that applies to card purchases.
The new regulations will require federally regulated financial institutions to receive express consent from a consumer before distributing such cheques, Menzies said. The proposed amendments to the Credit Business Practices Regulations will be published shortly for a 30-day comment period, Menzies said, and the final regulations will be released in the next few months.
The government also announced a new mortgage code, which requires that federal financial institutions explain the differences between mortgage products. This includes ways to pay off a mortgage faster without incurring pre-payment charges, and more information on how prepayment charges are calculated.
The banks have also committed to posting customer-friendly mortgage calculators on their websites, Menzies said.
"Canadians work hard to build a secure future for themselves and their families. They deserve clear and relevant information to make the best decisions in reaching that goal," Menzies said.
Both measures announced Sunday will give consumers fairer and more transparent information, Menzies said.
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