New Banking Rules: Lower Fees and Relief for Canadian Mortgages

On October 17, Deputy Prime Minister and Minister of Finance Chrystia Freeland unveiled a package of new affordability measures focused on mortgages and banking. Developed in consultation with the Financial Consumer Agency of Canada (FCAC), these proposals are part of a broader set of federal actions over the past two years aimed at easing the burden of inflation and the rising cost of living for Canadians.

What is the Government of Canada proposing?

Minister Freeland’s package targets four main areas: mortgages, bank account fees, so‑called “junk” fees, and dispute resolution. Junk fees include charges for non‑sufficient funds (NSF), overdraft protection, debit transactions and Interac e‑Transfers. The measures aim to make banking fairer and to help homeowners and account holders facing financial strain.

New mortgage guideline for banks

The FCAC issued a new mortgage guideline asking banks to proactively identify mortgage holders at risk of default and to offer tailored assistance. In early October, Minister Freeland met with the CEOs of Canada’s largest banks to discuss these expectations. The guideline emphasizes supporting homeowners who are struggling with higher mortgage rates.

Suggested forms of assistance include fee waivers, no‑cost financial education, extending mortgage amortization periods and other mortgage relief options designed to reduce the immediate risk of default and give borrowers more time to regain stability.

Reducing bank account and junk fees

The government has tasked the FCAC with setting expectations that banks provide free or low‑cost banking options and with encouraging the removal of unnecessary charges. While many no‑fee accounts exist, they are often limited to online institutions. At major banks, monthly chequing fees can range widely, and additional charges—such as for Interac e‑Transfers, out‑of‑network ATM use or NSF penalties—can add up quickly.

Currently, banks commonly offer low‑ or no‑cost options for youth, students and seniors. The government is urging banks to broaden access so more Canadians can benefit from affordable checking options and face fewer punitive fees when they fall short.

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Streamlining dispute resolution with banks

The federal government also wants to simplify and strengthen the consumer complaint process. A 2020 FCAC report flagged inefficiencies when banks could choose between two complaint bodies—the Ombudsman for Banking Services and Investments (OBSI) and the ADR Chambers Banking Ombuds Office (ADRBO). To create a clearer path for consumers, the government proposes designating OBSI as the single independent complaints body for banking disputes.

Why is the federal government taking these steps?

Rising interest rates, escalating housing costs and higher everyday expenses have created significant pressure for many Canadian households. The government frames these measures as efforts to ensure Canadians are treated fairly by their banks, to ease financial stress and to reduce the risk of a broader economic shock such as wide‑scale foreclosures.

These guidelines also sit alongside other federal actions in recent years, including targeted taxes on banks and insurers and regulatory changes that require larger capital buffers at major banks. Those earlier measures were intended to raise revenues for public programs, strengthen the financial system and reduce systemic risk. Critics in the banking sector have argued some steps are unfair to institutions, while the government maintains that profitable banks should contribute to Canada’s recovery and stability.

What do these measures mean for Canadians?

The proposals offer potential short‑term relief, but their ultimate impact depends on implementation and follow‑through. Fee waivers, amortization extensions and expanded financial literacy may help many borrowers avoid default, but structural problems remain: housing affordability, stagnant incomes versus rising costs, and broader inflationary pressures are not solved by limited accommodations.

Similarly, reducing or eliminating certain bank fees sounds beneficial, but many Canadians already have access to no‑fee accounts through online banks. Fees remain a meaningful revenue source for financial institutions, so voluntary changes may be limited unless clear regulatory expectations and enforcement mechanisms are established.

Designating OBSI as the single banking ombud may be a win for consumers who need an independent route for dispute resolution. A single, transparent arbitrator can speed up outcomes and reduce confusion. However, OBSI’s authority depends on its mandate and its ability to take complaints into jurisdiction, which is set to change in the coming months.

Overall, many Canadians will welcome continued federal efforts to reallocate some of the large profits earned by financial institutions during the pandemic and to reduce everyday financial pressures. Still, the effectiveness of the government’s approach will depend on how strongly the FCAC can enforce standards, how banks respond, and whether these measures are paired with broader policy actions to address housing affordability and stagnant wages.