The Honourable Jim Flaherty, Minister of Finance, today welcomed landmark new regulations to help consumers resolve disputes in a more timely, impartial and transparent manner.
“Today’s sweeping new rules will give more power to consumers looking to resolve a dispute with their bank by creating a stronger, more independent consumer complaint system. This will happen by putting in place, for the first time ever, a new framework that sets pro-consumer standards all banks and authorized foreign banks must meet and will ensure federal government supervision of the external complaints body’s compliance with the new regulations,” said Minister Flaherty.
While banks were required to have consumer complaints procedures in place and to be members of external complaints bodies prior to today’s proposed regulations, there were no regulatory standards established for the external complaints bodies, and no formal compliance monitoring by the Financial Consumer Agency of Canada (FCAC). Additionally, banks were allowed to select their external complaints body – with no minimum requirements that had to be met and no guarantees for consumers.
In recent years, some banks have changed external complaints bodies providers, leading to a variation in procedures used and uncertainty for consumers. To correct this situation and improve consumer protection, the Government engaged in a two-part process.
- First, legislation was passed to: force all banks and authorized foreign banks to belong to only federally-approved external complaints bodies; and give the FCAC the authority to monitor and enforce compliance.
- Second, through today’s announcement, proposed regulations are being advanced to implement the aforementioned legislation. Specifically, the regulations will – for the first time ever – set explicit requirements that external complaints bodies must meet for approval, including high standards for independence, timeliness and transparency.
These proposed regulations will also require banks to cooperate with their external complaints body by, for example, informing customers of the name and contact information of their external complaints body so that consumers clearly know who to contact when a dispute arises.
Also for the first time ever, the Financial Consumer Agency of Canada will now conduct an in-depth review of all external complaints bodies prior to their consideration for approval by the Minister of Finance, and then monitor such bodies on an ongoing basis and enforce compliance with these new, high standards. These regulations will be available online in the Canada Gazette on July 13, 2012 for a 30-day comment period. Contact information for forwarding comments is provided with the proposed regulations.