Montreal, February 13, 2020 - Saving or investing in just a few clicks, that's the promise of new financial companies called FinTech. Interesting? Yes, but also worrying, because these companies are not sufficiently supervised to properly protect consumers, says Option consommateurs in a report report published today.
With the help of their robo-advisors, these companies offer to round up every purchase to the nearest dollar, then deposit the money saved in an account for future investment, or deposit it in investments such as exchange-traded funds.
The home pages of these sites feature catchy phrases, but the information they contain is relatively vague. In just a few minutes, consumers can reveal a great deal of personal information and entrust large sums of money to companies about which they know little.
Option consommateurs conducted an in-depth analysis of the legal documents of three of these FinTechs: Mylo, Wealthsimple and BMO Smart Portfolio.
Although these companies must respect certain obligations, such as doing business with a certified financial advisor, they often prioritize promotion over information, and multiply disclaimer clauses.
"In some cases, the consumer can't even trust the information on the company's website, and the company accepts no responsibility for what's published there. But in return, the consumer is required to behave in a way that is virtually irreproachable, both in terms of the accuracy of the data he or she provides and the safeguards he or she equips his or her IT tools with," laments Maryse Guénette, author of the report at Option consommateurs.
Even though they feel in control of their transactions, the study reports that consumers know little about FinTech and confuse it with financial institutions.
Option consommateurs calls on the government to review consumer protection laws, particularly those governing distance contracts, as well as privacy laws, to ensure that they take into account the new issues arising from the operation of these companies.
The research "Saving and investing using FinTech - How to reconcile innovation and consumer protection?" was made possible thanks to a contribution from the Office of Consumer Affairs of Innovation, Science and Economic Development Canada.
About Option consommateurs
Option consommateurs is a not-for-profit association whose mission is to defend the rights and interests of consumers. It is closely involved in issues related to personal finance, business practices, financial services, protection of personal information, energy, health and agri-food.
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For more information or an interview:
Marie-Ève Dumont, Communications Advisor
514-777-6133
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