An effective and efficient complaint handling system is critical to the strength of Canada's financial system. Canadian consumers and their financial institutions benefit when there is timely and no-cost resolution to disputes when they arise.
Though a dispute resolution framework does exist, proposed regulations released today represent an important step towards strengthening this framework, principally through the articulation of clear criteria for the approval of external complaints bodies.
For example, though banks and authorized foreign banks are already required to have internal procedures in place to deal with consumer complaints, today's proposed regulations spell out high standards that an external complaints body must meet in order to facilitate the resolution of disputes.
By bringing clarity to the requirements external complaints bodies must meet, consumers can expect timely, impartial and transparent resolution of disputes.
A dispute resolution framework already exists in Canada for the banking sector, which specifies:
In 2010, the Harper Government took steps to strengthen this framework by legislating the requirement that banks and authorized foreign banks be a member of an external complaints body that has been approved by the Minister of Finance. Under these proposed regulations, only external complaints bodies of good character and integrity would be approved.
The FCAC would administer the approval process, conduct an in-depth review of external complaints bodies prior to consideration for approval by the Minister of Finance, and monitor and enforce compliance with these new, high standards. The FCAC will consult shortly on how the application process will work.
The proposed Approved External Complaints Bodies (Banks and Authorized Foreign Banks) Regulations build on this requirement by setting the standard that external complaints bodies must meet for approval as well as the obligations of banks and authorized foreign banks.
The regulatory standards would ensure that external complaints bodies are accessible, accountable, impartial and independent and that they discharge their functions and perform their activities in a transparent, effective, timely and cooperative manner. Building on this, the proposed regulations set specific standards on:
Accessibility – Consumers would be guaranteed that complaint handling is easily accessible and available at no cost.
Accountability – External complaints bodies would be accountable to consumers, banks and the FCAC.
Independence – Consumers would be provided with an independent and impartial hearing for their complaint.
Transparency – Transparent information on external complaints bodies will allow consumers and stakeholders to compare the effectiveness of the external complaints bodies.
Effectiveness – Consumers and the resolution of complaints would be the focus for all external complaints bodies.
Timeliness – Consumers would see complaints resolved in a timelier manner than current industry practice.
Cooperativeness – Banks and external complaints bodies would be expected to cooperate so that the process works well.