The Financial Consumer Agency of Canada (FCAC) is investigating how Canada’s big banks deal with customer complaints.
The federal government gave the banking watchdog the green light to proceed with the investigation in its fall economic update. The review, which is to be completed by June 2019, will look at disputes handled by the big banks internally, as well as financial industry complaints escalated to third-parties such as the Ombudsman for Banking Services and Investments (OBSI) and the ADR Chambers Banking Ombuds Office (ADRBO).
"We're going to analyze accessibility, timeliness and effectiveness of the complaint-handling processes of the banks and of the external complaint bodies," said the FCAC in a written statement.
The latest investigation comes after the FCAC completed a probe of sales practices at Canada's six largest banks earlier this year. That investigation was prompted by media reports of questionable sales tactics such as selling services without a customer’s consent. The agency said in a report released this past March that there are "insufficient controls" in place to prevent the sale of financial products that are misrepresented or unsuitable for Canadian consumers.
The agency also found several instances of "inadequate complaint investigations,” and urged banks to improve their oversight, management and reporting of consumer complaints. Canada's big banks each have an ombudsman who handles customer complaints. But if those are not resolved, then the dispute can be escalated to an outside third party. The banks select which outside body handles their complaints.
Banking-related investigations handled by the Ombudsman for Banking Services and Investments, a non-profit organization funded by the industry, rose 28% in 2017 to 370 complaints. Credit cards, mortgages and personal bank accounts drew the most customer grievances.
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