The Canadian Community Reinvestment Coalition is calling on the federal government to pass meaningful legislation to prevent banks from gouging consumers with high fees and arbitrary cuts to credit, loans and services.

Canada's big six banks recorded record profits this year, led by the Royal Bank with $5.22 billion in profit, up 35 per cent from 2009. (Nathan Denette/Canadian Press)Canada's big six banks reported profits totalling $21.5 billion this year, up 32 per cent from $14.34 in 2009.

"The federal government must facilitate the creation of a national financial consumer watchdog group, and require independent audits to determine if the banks are reaping excessive profits," said CCRC chair Duff Conacher.

CCRC is a non-profit coalition of 100 anti-poverty, consumer and economic development groups.

"Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably cut off from credit, costs the Canadian economy because it means that the banks are overcharging for their essential services and loans and choking off spending and job creation," Conacher said.

'Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably cut off from credit, costs the Canadian economy.'—Duff Conacher, CCRC chair

Conacher's group took direct aim at Finance Minister Jim Flaherty's credit card code of conduct which came into effect last August.

Calling it "loophole-filled," CCRC said the code does little to protect consumers in the real world. In particular, the group said the Conservative government has done nothing to prevent banks from cutting off credit for people and businesses that have made payments consistently, and are still credit worthy.

In an appearance before a Senate committee two weeks ago, the heads of Canada's credit card companies warned the government not to meddle in their business any further, saying it could hurt consumers.

The heads of Visa and MasterCard told senators that the code of conduct is working just fine, and any sort of mandatory system could have "unintended consequences."

However, Conacher's group believes that tighter rules around banks and credit card companies are exactly what are needed.

"The Conservatives' recent credit card and debit card codes and regulations are too little, too late to ensure Canada's big banks and other companies are not making excessive profits from gouging customers and cutting services," Conacher said.