With the proliferation of emails and other electronic documents, many federally regulated financial institutions (FRFIs) are updating their record retention policies to manage their documents. These policies need to take into consideration (1) the sharing of documents relating to customer complaints with external complaint bodies (ECBs); (2) the tolling agreements that most FRFIs are entering with their ECBs; and (3) the new Complaints (Banks, Authorized Foreign Banks and External Complaints Bodies) Regulations (the New Regulations) which came into force on September 2, 2013, and which impose additional obligations on banks and authorized foreign banks (Banks) regarding customer complaints (see our April 2013 Blakes Bulletin: Update: Final Complaints Regulations Published Plus New FCAC Guidance).


All FRFIs are required to have internal procedures in place to deal with customer complaints. In connection with their complaint-handling procedures, most FRFIs are also members of an ECB. (Currently, there are two ECBs serving the financial services industry in Canada, other than in respect of insurance: the ADR Chambers Banking Ombuds Office and the Ombudsman for Banking Services and  Investments, and two ECBs serving the insurance industry in Canada: the OmbudService for Life and Health Insurance and the General Insurance OmbudService.) Federally regulated trust and loan companies, insurance companies and retail associations are currently required to be a member of an ECB pursuant to their governing statutes. Banks are not currently required to be a member of an ECB but this will change once Bank Act amendments come into force and one or more ECBs are approved under the Bank Act (discussed below). In practice, most Banks are already members of an ECB.

Typically, FRFIs will first try to address a customer complaint themselves but if the customer is not satisfied with the FRFI's response, the customer may make a complaint to the ECB of which the FRFI is a member. Once a customer makes a complaint to an ECB, he or she is required to sign a consent letter that gives the FRFI permission to share information with the ECB so that the ECB can investigate the complaint.

When a complaint is made to an FRFI, the FRFI should implement a legal hold to ensure that all relevant documents are retained until the legal hold is lifted. Normally a legal hold will be lifted once the limitation period has passed or, if an action is brought, once the action is finally disposed of. The relevant documents should be retained even if the documents are provided to another department of the FRFI (such as the internal ombudsman's office) or the FRFI's ECB. An ECB is not an FRFI's record-keeper and FRFIs should not assume that an ECB will keep a copy of documents provided to it.


In addition to the above, most customers who make a complaint to an ECB are covered by a blanket tolling agreement (other than those complaints brought in Quebec, as the law in Quebec does not permit tolling agreements, which are also not typical in the general insurance industry). This tolling agreement is an agreement signed by most FRFIs and provided to the ECB that confirms a suspension of the limitation period for all complaints that come before the ECB. Tolling agreements vary by ECB and industry, but the limitation period is typically suspended starting from the date that the FRFI receives a copy of the consent letter signed by the client, and ends a certain number of days after the ECB sends its final report to the customer, or after the file is closed for any reason. The applicable limitation period begins to run again once the tolling agreement expires.

The existence of a tolling agreement does not alleviate FRFIs from their record retention obligations. On the contrary, a tolling agreement prolongs an FRFI's retention obligation. If the limitation period for a complaint is suspended as a result of a tolling agreement, the retention period for the information relating to that complaint must be extended until after the tolling agreement has ended and after the applicable limitation period has ended, or until the matter has been resolved if an action has been commenced. FRFIs need to implement a process to ensure that these tolling agreements are taken into account when determining the appropriate retention period for documents.

Failing to comply with proper record retention requirements, including the extended retention period that would be required if a tolling agreement was in place, could put an FRFI at risk of facing a claim of intentionally or negligently destroying evidence (known as spoliation), not having documents to support its case, or having a court draw adverse inferences against it for not having the required documents.


Amendments to the Bank Act that came into force on September 2, 2013 establish an approval process for ECBs by the Minister of Finance and require each Bank be a member of an ECB once one or more are approved. As noted above, the New Regulations also came into force on September 2, 2013. The New Regulations impose additional obligations on Banks regarding customer complaints and govern ECBs. Monitoring and enforcement in relation to ECBs will be carried out by the Financial Consumer Agency of Canada (FCAC).

It is expected that the existing ECBs will seek the Minister's approval in order to be an approved ECB for the purposes of the Bank Act. The FCAC began to accept notifications of interest from potential applicants seeking approval as an ECB on September 2, 2013.

One of the requirements of the New Regulations is that a Bank must provide its ECB with all information in its possession or control that relates to a complaint without delay after the ECB notifies the Bank that a complaint has been received. The New Regulations do not impose a requirement on ECBs to retain such information or to return it to the Bank. Therefore Banks should retain copies of all documents provided to their ECB. Banks will remain responsible for retaining documents in accordance with their record retention policy and taking into account limitation periods, as extended by any applicable tolling agreement. We assume that the tolling agreements will remain in place following the implementation of the New Regulations and related Bank Act amendments.

As a reminder, Banks should review their complaints procedures to ensure that they comply with the requirements set out in the New Regulations as well as the new minimum standards outlined in the Commissioner's Guidance published by the FCAC – CG-12 Internal Dispute Resolution, which also takes effect on September 2, 2013.