Canada's Budget 2025 introduces measures addressing financial services reform

On November 4, 2025, the Canadian federal government unveiled a series of legislative measures in Budget 2025 aimed at overhauling the financial services sector. The proposed initiatives are designed to modernize the industry, enhance consumer protection, and improve competition, while maintaining momentum on long-standing reform efforts.

Supporting Smaller Financial Institutions and Fintechs

One major focus of the budget is increasing support for small and medium-sized financial service providers, including credit unions and fintech companies. Proposed amendments to key federal statutes, such as the Bank Act and the Canada Deposit Insurance Corporation Act, aim to simplify processes for amalgamation, asset acquisition, and the transition of provincial credit unions to federal ones.

For smaller federally regulated financial institutions, the government plans to double the equity threshold requiring public ownership, raising it from $2 billion to $4 billion. This change is intended to help these organizations grow without being forced to alter their ownership structures.

Open Banking Framework and Broader Data Mobility

The government has also committed to advancing open banking initiatives in Canada. While the Consumer-Driven Banking Act was granted royal assent in 2024, regulations to implement the framework are still pending. Budget 2025 proposes legislative measures to operationalize open banking, granting Canadians data-mobility rights through amendments to the Personal Information Protection and Electronic Documents Act (PIPEDA).

In addition to the financial services sector, the government aims to extend the data-sharing framework across other industries, including health, telecommunications, and real estate. A key promise is the introduction of "write-access" capabilities by mid-2027, allowing payment initiation directly from bank accounts - a significant step to modernize Canada’s payments infrastructure.

The government’s timeline for completing the consumer-driven banking framework aligns with the widespread implementation of Payments Canada’s Real-Time Rail (RTR) system, which has faced delays but remains a governmental priority.

Stablecoin Regulation on the Horizon

Budget 2025 also signals the government’s intention to regulate fiat-backed stablecoins. By introducing legislation for stablecoin issuers, Canada aims to provide a clearer framework for the use of these digital assets, ensuring their safe integration into the financial system.

Strengthening Consumer Protections

Several consumer protection measures have been proposed to improve transparency and address common banking pain points. Key highlights include:

• Increasing the minimum withdrawal amount from deposited checks to $150, up from $100.
• Eliminating the distinction between in-person and other forms of check deposits for fund availability.
• Requiring banks to disclose foreign exchange costs for cross-border transfers.
• Obligating financial institutions to investigate misdirected payments.
• Prohibiting fees for transferring investment and registered accounts and mandating timely account transfers.

Additionally, the Financial Consumer Agency of Canada (FCAC) has been tasked with conducting a report on the structure and transparency of bank fees, which could inform future policy initiatives.

Combating Financial Crime

Combatting financial crime is another priority outlined in Budget 2025. The government proposes creating a new centralized Financial Crime Agency to lead enforcement efforts and reintroducing measures that were removed from earlier legislative drafts. These include:

• Bans on cash transactions exceeding $10,000.
• Prohibitions on third-party cash deposits.
• Enhanced public-private information sharing for anti-money laundering (AML) purposes, achieved through amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and PIPEDA.

To improve coordination, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will be added as a member of the Financial Institutions Supervisory Committee.

Expanding Oversight and Modernizing Enforcement

The Office of the Superintendent of Financial Institutions (OSFI) will receive expanded oversight powers under proposed changes. These include revising approval processes for transactions involving federal banks and other financial institutions, as well as addressing integrity and security risks tied to data and technology.

OSFI will also replace statutory limits on borrowing and commercial loan investments with guidance-based limits, allowing for greater regulatory flexibility.

Conclusion

Canada’s Budget 2025 represents a comprehensive approach to modernizing the financial services sector, addressing long-awaited reforms while promoting innovation and consumer protection. From supporting smaller financial institutions and introducing stablecoin regulation to advancing open banking and combating financial crime, these measures aim to strengthen the nation’s financial ecosystem and enhance trust among consumers and businesses alike. Whether these initiatives proceed as planned will depend on the successful passage and implementation of the associated legislation.

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