New consumer complaint requirements for banks 


July 2012

Financial Services Bulletin
Jared Grossman, summer law student

On July 6, 2012 the Minister of Finance announced new proposed regulations for banks and authorized foreign banks regarding consumer complaints. The proposed regulations were published in Part I of the Canada Gazette on July 14, 2012. The regulations, entitled Approved External Complaints Bodies (Banks and Authorized Foreign Banks) Regulations1 (the "Regulations"), set out standards that external complaints bodies must meet in order to maintain approval to settle consumer complaints. The Regulations also set out new obligations for banks and authorized foreign banks.

The Regulations are part of an initiative by the Government to formalize, through legislation, the requirement for banks to be a member of an approved external complaints body. According to the Government, the Regulations will "enhance the process for dealing with complaints under the Act by establishing a scheme for external complaints bodies that are accessible, accountable, impartial and independent and that discharge their functions and perform their activities in a transparent, effective, timely and cooperative manner".2


The majority of consumer complaints are dealt with internally by the banks. If a consumer is dissatisfied with the result received from a bank's internal process, they can file a further complaint with the bank's affiliate external complaints body. There were a total of 471 complaints made to external complaints bodies in the Canadian banking industry in 2011.3

The federal government previously passed legislation requiring all banks to be a member of an external complaints body approved by the Minister of Finance.4 However, the previous legislation did not specify the requirements for approval, and external complaints bodies were not formally monitored, which resulted in inconsistent procedures amongst the different bodies.5

The new regulations set out requirements that an external complaints body must meet in order to be approved and maintain approval. These requirements include: having a reputation for integrity, having services available in both English and French, acceptance of all membership requests from banks and transparency in its operations (e.g., making public the identity of its members and all sources of income received as a complaints body).6

The Financial Consumer Agency of Canada ("FCAC") will begin to undertake comprehensive reviews of the external complaints bodies prior to and during the period of their approval to ensure that they comply with all of the standards in the Regulations.7 Should external complaints bodies not comply with the Regulations, they will not be approved by the Minister of Finance, or their previously-granted approval will be revoked.

effect on banks

Section 5 of the Regulations states that a bank or authorized foreign bank must publicly display and make available copies of statements that contain the name and contact information of the external complaints body in which it holds membership. In order to comply with the Regulations this information must be available at all places where the financial institution's products or services are offered in Canada. This includes branches, automated teller machines and websites offering products or services in Canada. The federal government's rationale for this requirement is to force the banks to cooperate with their external complaints bodies as well as make the process easier for the consumer to understand.8

The Regulations also require that banks notify the FCAC before they change their external complaints body membership. Section 6 of the Regulations requires a bank or authorized foreign bank to notify the Commissioner of the FCAC in writing of its intention to change its external complaints body membership not less than 90 days before it becomes a member of a different body.

time frame

No time frame for the implementation of the Regulations has been announced. The Regulations will come into force on the day that they are registered by the Clerk of the Privy Council.9 The Department of Finance will accept comments and feedback on the proposed Regulations until August 12, 2012.

by Stephanie Robinson and Jared Grossman, Summer law student

1 Approved External Complaints Bodies (Banks and Authorized Foreign Banks) Regulations, (2012) C Gaz I Vol. 146, No. 28 — (14 July 2012), online:

2 Ibid at s 2.

3 Department of Finance Canada, News Release, "Backgrounder: Approved External Complaints Bodies (Banks and Authorized Foreign Banks) Regulations" (6 July 2012) online:

4 Ibid.

5 Department of Finance Canada, News Release, "Harper Government Imposes Tough New Pro-Consumer Oversight on Banking Complaints" (6 July 2012), online:

6 Supra note 1 at s 4.

7 Supra note 5.

8 Ibid.

9 Supra note 1 at s 8.

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2012