Canadian Lenders Association (CLA) Response to the Spring Economic Statement (2026)

The Spring Economic Statement reflects a government that is increasingly active in shaping the financial services landscape—through enforcement, consumer protection, housing finance, and competition policy. Many of these measures are directionally sound. However, taken together, they represent a meaningful expansion of regulatory scope that will require careful calibration to avoid unintended consequences for credit access, innovation, and market competition.

The question is not whether intervention is warranted. It is whether it is being implemented in a way that is coordinated, proportionate, and grounded in operational reality.

Financial Crime and AML: The Risk of Overbreadth

The creation of a new Financial Crimes Agency, combined with expanded FINTRAC authorities and enhanced oversight of money services businesses, signals a clear shift toward more centralized and assertive enforcement. The CLA supports this direction. Financial crime is evolving rapidly, and stronger coordination is both necessary and overdue. As these measures are implemented, it will be important to ensure that the framework remains streamlined, risk-based, and operationally practical, allowing resources to be focused where they are most effective.

The risk, however, lies in how these measures are operationalized. Through its ongoing engagement with FINTRAC; including participation in public-private working groups tied to the implementation of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the CLA has consistently emphasized the importance of a risk-based framework that targets high-risk activity without imposing blanket obligations across the system . Recent developments, such as the extension of beneficial ownership requirements into automotive finance, illustrate the challenge: compliance expectations that are technically sound can become operationally burdensome when they are applied at the point of transaction without regard to how information is actually obtained.

The cumulative effect of layered obligations across multiple agencies risks producing duplication rather than clarity. A more disciplined approach, focused on harmonization and proportionality, will ultimately be more effective.

Fraud Prevention and Identity: Fixing the System at Its Weakest Point

The government’s emphasis on fraud prevention is both necessary and timely. But enforcement alone will not address the underlying vulnerabilities that fraud actors exploit.

The CLA has been actively engaged in discussions surrounding Canada’s proposed National Anti-Fraud Strategy, including ongoing dialogue with Chief Risk Officers through its Risk Roundtable. These discussions reflect a clear shift in how fraud risk is being understood: no longer as a subset of AML compliance, but as a distinct and expanding area of regulatory expectation, spanning the full customer lifecycle, from onboarding and identity verification through to transaction monitoring and post-incident response.

This shift is being driven by a rapidly evolving threat environment. Fraud losses in Canada now exceed $700 million annually, with increasing sophistication in tactics, including synthetic identity fraud, AI-enabled social engineering, and cross-border coordination. The CLA has been actively advancing policy work in this area, particularly with respect to synthetic identity fraud, which has emerged as a systemic issue across the lending ecosystem. A central challenge is the erosion of reliable identity verification at origination. The declining use of the Social Insurance Number (SIN) – Canada’s only universal identifier – has made it more difficult to match identities, detect synthetic profiles, and prevent fraud before it occurs. Clarifying and modernizing the permissible use of SIN for identity verification, alongside the development of higher-assurance digital identity frameworks, would materially strengthen the system’s first line of defence. These issues have been explored in more detail in recent commentary from CLA leadership, including in the most recent Canadian Finance News article authored by President Gary Schwartz.

This is not a theoretical concern. Through its fraud-focused roundtables, including in real estate and automotive finance, the CLA is seeing increasingly sophisticated forms of social engineering and payment redirection schemes . The consistent takeaway is that fraud is now cross-sectoral. Effective mitigation will require real-time information sharing between financial institutions, telecommunications providers, digital platforms, and law enforcement-not siloed responses within individual sectors.

Housing Finance: A Clear Opportunity…if Access Is Broad

The government’s housing finance measures are a welcome example of policy moving in the right direction. Expanding mortgage insurance to cover multi-unit properties and accelerating capital through the Apartment Construction Loan Program are pragmatic steps toward addressing supply constraints.

Their effectiveness, however, will ultimately depend on who is able to participate. Non-bank lenders and alternative capital providers are already playing a meaningful role in financing “missing middle” housing. If access to these programs is concentrated within traditional channels, their impact will be limited. Broad-based participation will be essential to achieving scale and ensuring capital flows to the segments of the market where it is most needed.

More broadly, housing finance policy cannot be separated from Canada’s increasingly fragmented provincial regulatory landscape. Through its Real Estate Finance Roundtable, the CLA has been actively engaging on these issues across jurisdictions, ranging from British Columbia’s transition to a modernized mortgage services regime to federal advocacy aimed at updating mortgage insurance thresholds to better reflect current housing market realities. Across these discussions, a consistent theme has emerged: improving alignment and reducing unnecessary complexity is critical to ensuring that financing can move efficiently across markets.

For lenders operating nationally, fragmentation directly affects cost, speed, and ultimately the availability of credit, particularly in a housing environment where timely access to financing is closely tied to supply outcomes.The CLA will continue advancing these discussions in the months ahead, including by convening expert voices from both the public and private sectors to examine these themes at its upcoming Real Estate Finance Summit in Toronto this September.

Tax Measures: Incentives, Relief, and System Complexity

The tax measures outlined in the Spring Economic Statement are broad in scope, spanning investment incentives, targeted relief, and administrative changes across multiple sectors. Many of these initiatives- such as enhancements to investment tax credits, GST relief for first-time homebuyers, and temporary excise tax reductions- are directionally aligned with the government’s objectives of improving affordability and stimulating economic activity.

From the CLA’s perspective, the key consideration is how these measures function in practice across the financial ecosystem. Targeted tax incentives can play a meaningful role in unlocking capital and supporting lending activity, particularly in housing and business investment. However, the growing number of narrowly tailored credits, exemptions, and temporary measures risks adding further complexity to an already intricate system. For lenders and financial intermediaries, this can create operational friction, increase compliance costs, and introduce uncertainty in how programs are interpreted and applied.

As with other areas of reform, the effectiveness of these measures will depend on execution. A more streamlined and coordinated approach to tax policy- one that prioritizes clarity, stability, and ease of administration- will be critical to ensuring that intended benefits are fully realized and that capital can move efficiently to the areas of the economy where it is most needed.

Competition and Consumer Policy: Level Playing Field or Uneven Impact

The government’s competition agenda, including the implementation of consumer-driven banking, represents a potentially transformative shift. Done well, it could materially improve competition, innovation, and consumer choice.

But that outcome is not guaranteed. It will depend on whether the framework is genuinely inclusive. For years (since 2020!), the CLA has advocated for open banking models that include non-bank lenders and small business accounts from the outset, ensuring that data portability enables competition rather than reinforcing incumbency.

At the same time, other interventions, such as caps on certain banking fees or changes to lending rules, risk creating uneven impacts across the market. The recent reduction in the maximum allowable rate of interest is a clear example. While intended to protect consumers, it constrains the ability of responsible lenders to price risk appropriately, particularly in the non-prime segment. As the CLA has noted in its federal advocacy, limiting risk-based pricing does not eliminate demand for credit; it displaces it, often toward less regulated alternatives.

Competition policy must be understood in these terms. A system that is more restrictive is not necessarily more competitive.

The Combined Effect of Reform

The defining feature of this Spring Economic Statement is not any single measure, but the cumulative effect of all of them. Financial crime reform, competition policy, consumer protection, housing finance, and fraud prevention are all advancing simultaneously, often through different channels and with different timelines.

Each initiative is defensible on its own terms. But collectively, they risk creating a level of regulatory complexity that is difficult to navigate, particularly for smaller and mid-sized participants who are essential to maintaining competition and expanding access to credit.

The Canadian Lenders Association remains supportive of the government’s objectives. But achieving those objectives will require a disciplined focus on execution, ensuring that regulation is targeted rather than expansive, coordinated rather than fragmented, and enabling rather than restrictive.

The CLA’s ongoing work; whether through engagement with FINTRAC, advancing identity verification reform, or supporting greater regulatory harmonization across provinces, is grounded in that same principle: that a well-functioning financial system must be both secure and accessible.

That is ultimately the balance that will determine whether these reforms strengthen Canada’s financial system or inadvertently constrain it.

Keypoints

The Spring Economic Statement reflects a government that is taking a more active role in shaping Canada’s financial services landscape. The Canadian Lenders Association supports many of the government’s objectives, but the central concern is execution: reforms must be coordinated, proportionate, and grounded in operational reality.

1. Government is expanding its role in financial services

The statement touches enforcement, AML, fraud prevention, housing finance, tax incentives, competition policy, consumer protection, and open banking. The key issue is not whether intervention is warranted, but whether these reforms are being implemented in a coordinated and practical way.

2. AML and financial-crime enforcement are moving in the right direction, but risk overreach

The creation of a new Financial Crimes Agency, expanded FINTRAC authorities, and stronger oversight of money services businesses are positive developments. However, obligations must remain risk-based and operationally practical. Blanket compliance requirements could create duplication, friction, and unnecessary burden.

3. Fraud prevention requires stronger identity infrastructure

Fraud is no longer simply a subset of AML compliance. It now spans the full customer lifecycle, from onboarding and identity verification to transaction monitoring and post-incident response. Synthetic identity fraud, AI-enabled social engineering, and cross-border fraud schemes are increasing the need for stronger identity verification.

4. Canada needs to modernize SIN and digital identity rules

The decline in the use of the Social Insurance Number as a reliable identity-matching tool has weakened fraud prevention at origination. Clarifying the permissible use of SIN for identity verification, alongside higher-assurance digital identity frameworks, would strengthen the system’s first line of defence.

5. Fraud is cross-sectoral and requires real-time information sharing

Effective fraud mitigation will require coordination between financial institutions, telecommunications providers, digital platforms, and law enforcement. Siloed responses within individual sectors are no longer sufficient.

6. Housing finance measures are positive, but access must be broad

Expanding mortgage insurance to cover multi-unit properties and accelerating capital through the Apartment Construction Loan Program are practical steps toward addressing supply constraints. Their impact will depend on whether non-bank lenders and alternative capital providers can participate meaningfully.

7. Provincial fragmentation is becoming a housing-finance problem

Housing finance policy cannot be separated from Canada’s fragmented provincial regulatory landscape. For lenders operating nationally, inconsistent rules increase cost, slow financing, and reduce the availability of credit, particularly in markets where timely financing is tied directly to housing supply.

8. Tax measures may help, but complexity is a risk

Investment tax credits, GST relief for first-time homebuyers, and temporary excise tax reductions may support affordability and investment. However, the growing number of targeted credits, exemptions, and temporary measures risks adding complexity, increasing compliance costs, and creating uncertainty for lenders and intermediaries.

9. Open banking must include non-bank lenders and small business accounts

Consumer-driven banking could improve competition, innovation, and consumer choice. But the framework must include non-bank lenders and small business accounts from the outset. Otherwise, data portability may reinforce incumbency rather than expand competition.

10. Consumer protection must not undermine credit access

Measures such as interest-rate caps may be intended to protect consumers, but they can limit the ability of responsible lenders to price risk, especially in the non-prime segment. Restricting risk-based pricing does not eliminate demand for credit. It may push borrowers toward less regulated alternatives.

11. The main risk is cumulative complexity

Each reform may be defensible on its own, but collectively they risk creating a regulatory environment that is difficult to navigate, especially for smaller and mid-sized market participants. These firms are essential to maintaining competition and expanding access to credit.

12. The CLA’s core position

The CLA supports the government’s objectives, but believes success will depend on disciplined execution. Regulation should be targeted rather than expansive, coordinated rather than fragmented, and enabling rather than restrictive.