The Financial Consumer Agency of Canada has released a proposed Guideline to support the implementation of the new Financial Consumer Protection Framework in the Bank Act. Banks are already responsible for setting out policies and procedures to ensure they deal with consumer complaints, and the Guideline sets out further principles and expectations for these policies, including principles of effectiveness, timeliness and accessibility. To be effective, policies are expected to include mechanisms for getting regular feedback from consumers and a process for monitoring and testing policies and procedures. Employees who are designated as being responsible for either or both of implementing a bank’s policies and procedures, or receiving and dealing with complaints, are expected to have the experience, competencies and authority required to deal with complaints, and their titles should reflect that authority. Of note, the policies and procedures are expected to include an analysis of complaint data to identify opportunities to better serve the bank’s consumers.
They are also to include mechanisms for identifying and remedying recurring or systemic issues and tracking the causes of complaints to identify root causes. Where such issues have been identified, the policies are expected to ensure the bank provides redress and/ or reimbursement to all affected consumers. Timelines for dealing with complaints internally are also set out in the Guideline. A bank’s written response to the consumer (to close or resolve the complaint) would have to include specified information in order to allow the consumer to take the complaint to a bank’s external complaints body if they chose to do so.
Overview of the Council’s Comments:
The CAC remains very interested in the structure and efficacy of dispute resolution and complaint handling processes that exist in the financial services industry and has commented on similar issues to the Department of Finance Canada with respect to its consultation on strengthening Canada’s external complaint handling system, and on related matters to various provincial securities authorities. The broader framework of our Canadian financial ecosystem demands that we ensure this process is consumer friendly, efficient, and transparent, while supporting financial consumer trust in the sector.
The Proposed Guideline sets out the FCAC’s expectations with respect to compliance with the new complaint-handling provisions in the Bank Act and the Financial Consumer Protection Framework Regulations. The CAC agrees with the key principles of effectiveness, timeliness and accessibility as expressed in the Proposed Guidelines. It is imperative for the principle of effectiveness to capture the concept of continuous improvement with respect to the resolution of systemic and/or reoccurring issues that impact financial consumers. Institutions should be empowered to not only address individual complaints, but to analyze trends in complaints, with the scope of broadly mitigating future complaints through policy recommendations. Complaints can be a credible indicator of systemic problems that can only be solved through policy action or rule-making activities. In this light, sharing complaint data amongst regulators, institutions and external dispute resolution bodies is an important step towards meeting the effectiveness principle. The longer-term result will very likely be the development of a more effective ecosystem that self improves thus lowering the resulting ongoing maintenance and resolution costs for members, and implicitly delivering an improved consumer experience.
From a financial consumer’s perspective, the timeline for dealing with complaints is an important feature of the complaint resolution process; some retail consumers may be experiencing a life changing event as a result of the circumstances of the complaint. The CAC understands that banking legislation and regulation provides that a complaint must be dealt with within 56 days following the day it is received. The term “received” is interpreted differently by different financial institutions; some view it as the day the consumer made the complaint to the first person the consumer spoke to in the
institution, while others see it as the day the file is documented as opened. The Proposed Guideline correctly emphasizes the importance of quick resolution, while implicitly recognizing that in certain cases delay is caused by the complainant (e.g., lack of response to questions) rather than the bank. Consumer and complainant expectations might be better managed through additional proactive communication on the part of financial institutions and dispute resolution bodies.
The CAC remains very supportive of the prohibition on using misleading terms with respect to complaint-handling procedures, including any term that suggests independence from the bank where it doesn’t exist and highlighted specific concerns with the use of the term “ombudsman” in a prevalent manner by certain banks, which is very confusing for consumers.