Banking clients face complications when escalating complaints

By The IJ Staff | February 19 2020 03:30PM


The Financial Consumer Agency of Canada released on Feb. 19 the results of its review of banks' procedures for handling consumer complaints and its review of the operations of external complaints bodies (ECBs).

In its review, FCAC examined the complaint handling procedures of Canada's six largest banks. It also reviewed the external complaints bodies: ADR Chambers Banking Ombuds (ADRBO) and the Ombudsman for Banking Services and Investments (OBSI).

The agency says that while banks resolve the majority of complaints “quickly and to the consumer's satisfaction, consumers also face delays and complications when escalating their complaint beyond the first point of contact.”

FCAC says escalation procedures “put the onus on consumers to navigate a complex system that is slow and cumbersome, resulting in a significant proportion of these consumers becoming dissatisfied and abandoning their complaint.”

The agency estimates that more than five million consumers file at least one complaint with a bank every year and that 76% of complaints were resolved at the first point of contact. It also estimates that more than 90% of consumers whose complaint was not resolved to their satisfaction at the first point of contact did not escalate their complaint. This suggests “the escalation process is not straightforward or easy for consumers,” says the agency.

External complaints bodies

The agency’s review found that external complaints bodies meet most of the regulatory requirements, but “there are deficiencies and opportunities for improvement and areas where the ECBs could follow more closely international best practices.”

FCAC’s reports also identified a number of deficiencies in the policies, procedures and operations of banks and ECBs. The agency says it will address these deficiencies through its supervision work. “In addition, the new Financial Consumer Protection Framework will require banks to ensure their consumer complaints procedures are satisfactory to the FCAC Commissioner, providing another tool to promote better complaint handling,” stated the agency.

"A critical element in a well-functioning financial system is an efficient and effective method for consumers to get their problems resolved. Mistakes will happen, but when the process works well, it builds trust and confidence in financial institutions and in the system of oversight. FCAC's supervisory work will ensure that both banks and ECBs comply with the consumer protection provisions and improve the process for resolving disputes," stated Judith Robertson, Commissioner, Financial Consumer Agency of Canada.

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