Financial Consumer Agency of Canada to conduct investigation into consumer complaint processes

In its Fall Economic Statement released November 21, 2018, the Government of Canada detailed upcoming initiatives and legislative amendments respecting consumer protection in banking. Among the updates, the Fall Economic Statement announced that the Financial Consumer Agency of Canada (“FCAC”) will conduct a review by June 2019 to assess banks’ complaints handling processes and the effectiveness of the external complaints bodies such as the Ombudsman for Banking Services and Investment (OBSI) and the ADR Chambers Banking Ombuds Office (ADRBO).

While the review is still in the planning stages, a spokesperson for the FCAC has stated that in conducting the review the FCAC will “analyze accessibility, timeliness and effectiveness of the complaint-handling processes of the banks and of the external complaint bodies”.

This newly announced review comes only months after the FCAC issued its Domestic Bank Retail Sales Practice Review, where it concluded that there insufficient controls exist to prevent sales of misrepresented or unsuitable financial products. The FCAC also found “numerous instances of inadequate bank investigations of consumer complaints”. In its conclusory statements the FCAC advised that it would be increasing the resources devoted to its supervisory and enforcement functions.

Concurrent to this investigation, both the OBSI and ADRBO experienced an increase in complaints. The OBSI’s Annual Report 2017 reported that it had opened 721 new investigations, representing a 13% increase in total cases. ADRBO’s 2017 Annual Report outlines similar upticks in complaints, with the organization formally opening 275 new complaints, which represents a 22% increase from 2016.

These factors may have precipitated this new review into internal and external process for handling of consumer complaints, as well as the effectiveness of those processes. The reviews are also reflective of the regulators’ continued focus on consumer expectations.