On July 16, 2021, the Department of Finance Canada ("Finance") issued a consultation paper (the "Paper") on Canada's external complaint handling system in banking. Finance is now requesting feedback on specific questions listed in the Paper, which cover the following topics:

  • the proposed guiding principles and objectives of Canada's external complaint handling system;
  • the findings of Financial Consumer Agency of Canada (the "FCAC") report concerning the structure of Canada's external complaint handling system; and
  • key attributes of an effective external complaint handling process.

Finance wants to hear from financial institutions, external complaints bodies ("ECBs"), consumer advocates, civil society groups, provincial stakeholders, and interested members of the public. Comments must be submitted before October 14, 2021.


In 2018, the Government of Canada passed the Financial Consumer Protection Framework to further protect consumers in their dealings with banks. In February 2020, FCAC released a report reviewing the complaint handling process in banking and the effectiveness of ECBs. The Paper solicits comments on specific findings from the FCAC report. This consultation is part of an ongoing process to inform the supporting regulations of the Financial Consumer Protection Framework. (Along with an overview of the framework, we have published a series of articles examining its specific elements [which may be viewed at the bottom of this page]. Last year, we wrote about the new framework's expanded definition of "complaint", which is expected to increase the number of complaints banks will have to track and report to the FCAC.)

The complaint-handling system in Canada has two parts: banks' internal complaint handling practices and the external complaints handling system. Banks must have internal procedures to deal with complaints, and they must designate employees to implement these procedures. If consumers are dissatisfied with a bank's internal complaints process, they can escalate their complaint to the bank's ECB. All Canadian banks must be members of an ECB. Canada currently has two approved ECBs: ADR Chambers Banking Ombuds Office ("ADRBO") and the Ombudsman for Banking Services and Investments ("OBSI").

Guiding Principles

The Paper sets out the following guiding principles to inform policy reform in the external complaint handling system. The system should be:

  • Accessible: complaints should be easy to understand, available in French and English, and free to consumers.
  • Accountable: ECBs should be subject to regulatory overview and accountable to their stakeholders.
  • Impartial and independent:  complaints resolution should be objective and free from undue influence and conflicts of interest.
  • Timely and efficient: complaints should not face undue delays in their resolution.
  • Impactful decisions: customer complaints should be genuinely resolved and banks should adhere to their decisions.

Consultation Questions

As Finance considers the policy direction for Canada's external complaint handling system in banking, the Paper requests comments on the following questions:

1. Are the guiding principles appropriate to guide future policy directions on the structure and key elements of the ECB system in Canada?

2. What ECB system structure would best address the deficiencies identified in the FCAC report and most effectively uphold the guiding principles outlined in the previous section?
This question specifically refers to the challenges flowing from having multiple ECBs, as opposed to a single ECB.

3. To what extent does the profit structure of an ECB have a real or perceived impact on the impartiality and independence of an ECB? 
ADRBO is a for-profit entity whereas OBSI is a not-for-profit.

4. To what extent could an ECB's fee assessment formula impact the real or perceived impartiality and independence of the ECB?

ADRBO charges member banks by the average number of complaints and an hourly rate whereas OBSI charges based on the size of the institution and historical complaints.

5. What are the benefits to consumers from a banking ECB that provides non-bank dispute resolution services? Are there drawbacks?
ADRBO is a branch of ADR Chambers, a dispute resolution service firm. OBSI membership is required for all registered dealers and advisors by the provincial securities commissions.

6. Should an ECB be required to provide complainant assistance to customers, and what type of complainant assistance should be provided?

7. Do you have views on whether the decisions of an ECB should be binding or non-binding on banks? Please refer to the guiding principles to support your position.
The Capital Markets Modernization Taskforce released a report recommending that the Ontario Securities Commission designate a dispute resolution service that can issue binding decisions. ECB recommendations are non-binding.

8. Should the government establish requirements for representation on the board of directors of an ECB? To what extent should an ECB be required to make public its governance process?
The ADRBO board is five individuals from the dispute resolution field and other related fields. The OBSI board is majority non-industry representatives. The remaining members are chosen from an industry-approved list.

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