Canada: New Requirements For Financial Institution

Last Updated: December 10 2013
Article by Brett Kenworthy


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.

(i) 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.

(2) 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.

(3) 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.

(ii) 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.

(iii) 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.

* Assisted by Jami Makan, a summer student at the firm, and by Graham Topa, an articling student at the firm.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Brett Kenworthy
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.