On September 2, 2013, new regulations and commissioner’s guidance from the Financial Consumer Agency of Canada (the “FCAC”) came into effect. These regulatory frameworks impose three overarching changes: (i) guidance with respect to the creation and operation of internal dispute resolution practices and procedures of federally regulated financial institutions (“FRFIs”); (ii) enhanced oversight requirements for external complaints bodies that provide services to banks listed in Schedule I and II of the Bank Act, as well as authorized foreign banks (which are the subject of an order under subsection 524(1) of the Bank Act) (collectively, “Banks”); and (iii) additional dispute resolution reporting requirements for Banks. As a result of these amendments, all FRFIs should review internal dispute resolution practices and procedures to ensure compliance, and each Bank should additionally ensure that the external complaints body to which it is a member has been approved by the Minister of Finance.

  1. Internal Dispute Resolution

The intention under the legislation and new FCAC commissioner’s guidance appears to be that the vast majority of complaints made by a person (the “Complainant”) be handled internally and that external complaints bodies operate only as a last resort. While FRFIs are already required by legislation to have dedicated personnel and procedures in place to attempt to resolve such complaints, the FCAC commissioner’s guidance, CG-12 Internal Dispute Resolution (the “IDR”), provides direction to FRFIs with respect to expectations for compliant internal dispute resolution policies and procedures. The three guiding principles of the IDR are: (1) effectiveness; (2) efficiency; and (3) accountability.

  1. Effectiveness

FRFIs must demonstrate that internal dispute resolution policies are designed to achieve a successful resolution to customer complaints. In the IDR, the FCAC commissioner indicates that it will evaluate effectiveness upon four criteria: (1) organizational commitment; (2) adequate resources; (3) training for staff and (4) monitoring and reporting systems. These criteria are examined in depth in the IDR. The underlying focus of the FCAC’s evaluative metrics appear to emphasize that FRFIs commit to the independence, impartiality and ability of dispute resolution staff to deliver proper resolution to a complaint, while retaining complaint data in an accessible form.

  1. Efficiency

In the IDR, the FCAC emphasizes that efficiency is the timely resolution of disputes. However, the IDR is equally focused upon the transparency of FRFIs’ process and encourages communication at important milestones with respect to the anticipated timeline and progress of the complaints. The IDR also identifies the necessity of educating a Complainant on how to raise a complaint that was not resolved satisfactorily to an external complaints body.

  1. Accountability

FRFIs can demonstrate accountability by providing accessibility and transparency for a Complainant submitting to the internal dispute resolution process. Legislation requires that FRFIs disclose their complaint-handling procedures: (i) in brochures; (ii) on their website; and (iii) in writing, upon request. Additionally, the FCAC has indicated it will consider written policies and procedures with relation to internal dispute resolution issues to demonstrate an overall commitment to accountability.

  1. External Complaints Bodies

Where the internal dispute resolution process fails to resolve the complaint to the satisfaction of the Complainant, it can be brought before an external complaints body for determination. By law, every FRFI must be a member of an external complaints body and this has not changed. It would appear that the intention behind creating such external complaints bodies is to enhance the transparency and efficacy of the complaint process of FRFIs, as well as to enhance a potential Complainant’s knowledge of and access to a process designed to be impartial. However, the Complaints (Banks, Authorized Foreign Banks and External Complaints Bodies) Regulations, S.O.R./2013-48 (the “Regulations”) now impose an additional requirement that Banks be members of an external complaints body approved by the Minister of Finance. The Regulations serve two purposes: (1) to increase the requirements of external complaints bodies with member Banks; and (2) to impose additional reporting requirements upon Banks.

The Regulations require that Banks provide a Complainant with the necessary information to submit a complaint, as well as any information necessary to enable the complainant to meet the requirements of its dispute resolution procedures. The Regulations specifically state that “all information … must be provided in language that is clear, simple and not misleading.” The Regulations also require that each Bank displays and makes available to the public (at all locations where business with the public is carried on and where it opens or initiates the opening of retail deposit accounts) copies of a written statement disclosing the name and contact information of the external complaints body of which it is a member. Additionally, once notification of a complaint is provided by a Bank’s designated external complaints body, the Bank must cooperate by providing without delay all relevant information in their possession or control.

While outside of the scope of this article, the FCAC commissioner’s guidance CG-13 Application Guide for External Complaint Bodies serves to clarify how external complaints bodies may submit an application and receive approval from the Minister, upon the recommendation of the commissioner of the FCAC. The FCAC will ensure the compliance of the external complaints bodies.

  1. Reporting Requirements

Banks’ policies and procedures must demonstrate how it will adhere to the Regulations. An additional requirement imposed by the Regulations includes that Banks must identify the most senior position authorized to resolve such complaints. The Regulations require that Banks disclose: (a) the number of complaints dealt with by the most senior officer or employee designated by the bank for such a purpose; (b) the average length of time spent for the senior officer or employee to address complaints; and (c) the number of complaints that were resolved by the senior officer or employee, in accordance with the Bank’s procedures, to the satisfaction of the Complainant. In order to disclose this information, the Regulations require that Banks use an appropriate format to publicly report such information on an annual basis (for example, its inclusion in an Annual Report, Public Accountability Statement, etc.).


There are a few action points that can be taken from the newly effected changes to the regulatory framework. First, all FRFIs should review internal dispute resolution practices and procedures to ensure compliance with the IDR. Second, each Bank should ensure that the external complaints body to which it is a member applies under subsection 455.01(1) of the Bank Act and is approved by the Minister of Finance. Furthermore, it is important that each Bank reviews whether its policies and procedures comply with the disclosure requirements, with respect to: (i) the disclosure and availability of contact information for its external complaints body to its customers; and (ii) the provision of information in its possession or control when requested by the external complaints body. Finally, Banks must update the necessary policies and procedures to comply with the additional annual reporting requirements.

Jami Makan and Graham Topa