OTTAWA, ON—Canadian banks have done a reasonably good job in resolving customer complaints. But they need to step up their game when it comes to customer issue escalation.
The Financial Consumer Agency of Canada (FCAC) has released the results of its review of banks’ procedures for handling consumer complaints and its review of the operations of external complaints bodies (ECBs).
The FCAC found that banks resolve the majority (76%) of complaints quickly, at the first point of contact, and to the consumer’s satisfaction. But consumers also face delays and complications when escalating their complaints beyond it.
The agency estimates that more than 90% of consumers whose complaints were not resolved to their satisfaction at the first point of contact did not escalate them. This suggests the escalation process is not straightforward or easy for consumers. Escalation procedures put the onus on them to navigate a complex system that it said is slow and cumbersome, resulting in a significant proportion becoming dissatisfied and abandoning their complaints.
The FCAC reviewed the complaint handling procedures of Canada’s six largest banks (Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and The Toronto-Dominion Bank). The agency estimates that more than five million consumers file at least one complaint with a bank every year.
ECBs need improvement too
The FCAC found that while the ECBs meet most of the regulatory requirements, there are deficiencies and opportunities for improvement and areas where they could follow more closely international best practices.
The review also validated some of the broader concerns raised by consumer representatives about the multiple ECB structure. The FCAC reviewed both external complaints bodies: the ADR Chambers Banking Ombuds (ADRBO) and the Ombudsman for Banking Services and Investments (OBSI). Moreover, most consumers are not aware of ECBs.
The reports identified several deficiencies in the policies, procedures and operations of banks and ECBs. The agency said 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, thereby providing another tool to promote better complaint handling.
Impartial and effective complaint handling is important to ensure consumer confidence and trust in financial institutions, said the agency. It will continue its work in making sure that both banks and the ECBs comply with relevant consumer protection measures.
“A critical element in a well-functioning financial system is an efficient and effective method for consumers to get their problems resolved,” said Judith Robertson, Commissioner, Financial Consumer Agency of Canada. “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.”