Consultation on banks’ external complaint handling commences

Following FCAC reports, comments sought on future direction to strengthen complaint handling

Consultation on banks’ external complaint handling commences

Building on past reports on Canada’s banking system conducted by the Financial Consumer Agency of Canada (FCAC), the Department of Finance has launched a consultation that seeks to strengthen the country’s system of external complaint handling among Canadian banks.

“Effective complaint handling helps ensure that the financial system works efficiently and fairly, thereby enhancing consumer confidence in the system,” the finance department said in a new consultation document titled Strengthening Canada's External Complaint Handling System.

It noted that under current rules, all banks are required to submit themselves to the jurisdiction of an external complaint body (ECB), which must be approved by the Minister of Finance.

At the moment, two ECBs have the required approval. The Ombudsman for Banking Services and Investments (OBSI) was created in 1996 as the sole ECB for Canada’s banking sector. Meanwhile, the ADR Chambers Banking Ombuds (ADRBO) was created in 2008, and has since been adopted by several of the Big Six banks as their ECB.

In a report on Canada’s complaint handling system published last year, the FCAC noted several problems with the current multiple-ECB model. It said the choose-your-own-ombudsman setup, where banks can select which ECB they fall under, “can have a negative [e]ffect on consumers' perceptions of the fairness and impartiality of external dispute resolution.”

It noted that only two of the Big Six are within the ambit of OBSI, which most favourably compares to international best practices for an external complaint resolution body. It also cited the World Bank, which said the impartiality of external dispute resolution bodies is put at risk when banks are allowed to choose among different ECBs.

To address concerns around the effectiveness of Canada’s bank complaint handling system, the government is inviting comments from all stakeholders. In its consultation document, it made suggestions and posed questions for feedback on the profit structure and funding model of an ECB, an appropriate scope of ECB functions, whether and to what extent an ECB should provide complainant assistance, and whether an ECB’s recommendations should be binding.

“The government invites all stakeholders to participate in this consultation process by responding to the consultation questions outlined in this document by October 14, 2021,” the document said.


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