New Normal in Financial Services — 3 regulations that should be enacted in Canada post C-19
In Canada, as government support and mortgage repayment deferrals will taper off in the fall, we will see 1) wide negative impacts on…
In Canada, as government support and mortgage repayment deferrals will taper off in the fall, we will see 1) wide negative impacts on Canadian credit scores 2) wave of bankruptcies.
It is the right time to rethink some of our policies and regulations…that should have already been changed or put in place a while back.
When it comes to credit worthiness, FICO scores are ubiquitous despite driving negative behaviors and not being the best tool in terms of accuracy and fairness. Dropping the FICO score system and implementing, like in some European countries, a negative file system where only severe negative information (like bankruptcies) are recorded for a limited time would allow Canadians to think and act more positively when it comes to their finances. At a time where many Canadians’ credit scores will be massively negatively impacted, we should use this crisis to change this outdated approach.
The Canadian bankruptcy laws are way more stringent than in the US, explaining in part the outsized appetite of our neighbors for entrepreneurship. Modifying some of our bankruptcy laws would support these entrepreneurs and individuals who have been terribly impacted by C-19 and would remove some of the barriers to start businesses for new and repeat entrepreneurs. Hence creating new jobs, tax streams and overall wealth.
Impact investing has seen a surge of interest during the crisis. However, investors (retail or institutional) have no certainty that these investments are truly socially responsible due to significant “green washing” that has been happening. French regulators (AMF) are putting controls in place to insure the accuracy of the socially responsible claims. Such measures should be put in place in Canada as well to support investors interested by such investments and enable the flow of capital in direction of responsible investing.
These changes would support the Canadian agenda of jump-starting the economy, decreasing inequalities and supporting the environment.
If not now, When?
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