On April 10, 2013, the Canadian federal government announced the final publication of new regulations that will govern the system for resolving complaints regarding products or services provided by banks and authorized foreign banks in Canada (the “Complaints (Banks, Authorized Foreign Banks and External Complaints Bodies) Regulations”). The regulations (which were first published for comments in July 2012), and the corresponding amendments to federal banking legislation, will come into effect on September 2, 2013.

External Complaint Bodies

Bank customers are currently able to refer unresolved complaints regarding a bank’s products or services to an external complaint body that will seek a resolution impartially. Banks operating in Canada are already members of such external complaint bodies. The new regulations seek to entrench standards for the operation, impartiality and transparency of all external complaint bodies that provide services in Canada’s banking sector. The regulations include criteria for receiving and maintaining Ministerial approval to act as an external complaint body. They also establish certain service standards for such bodies, including a requirement to issue final written recommendations to parties to a dispute within 120 days after the proper referral of complaint.

The Federal Consumer Agency of Canada

The Financial Consumer Agency of Canada Act (Canada) has been amended to expand the role of the Federal Consumer Agency of Canada (FCAC) to include oversight of the regulation of customer complaints and the activities of external complaint bodies. The FCAC has published an Application Guide for External Complaint Bodies for use by entities seeking to serve that role.

Impact for Banks

Banks in Canada already have dedicated procedures and personnel for addressing customer complaints, in accordance with industry standards and legislation and regulations currently in effect. As a result, banks are generally well positioned to meet the new regulatory requirements. The new regulations do set out standards for information disclosure to ensure consistency across the banking sector. This includes providing certain information regarding their complaints procedures and external complaints bodies to its customers as well as annual public disclosure regarding complaints addressed internally by the bank.