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Canada: Ottawa Lays Out New Rules for Consumer Complaints Against Banks |
| Source: |
www.ottawacitizen.com |
| Source Date: |
Friday, July 06, 2012 |
| Focus: |
Knowledge Management in Government
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| Country: |
Canada |
| Created: |
Jul 10, 2012 |
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Finance Minister Jim Flaherty has announced new rules aimed at bolstering the consumer complaint process for banks, which has come under pressure in recent years from the industry.
Under the new system, banks will be compelled to give consumers the option of taking unresolved complaints to any independent organization that has been approved by the government to sort out disputes.
“Today’s sweeping new rules will give more power to consumers looking to resolve a dispute with their bank by creating a stronger, more independent consumer complaint system,” Mr. Flaherty said in a statement.
“This will happen by putting in place, for the first time ever, a new framework that sets pro-consumer standards all banks and authorized foreign banks must meet and will ensure federal government supervision of the external complaints body’s compliance with the new regulations.”
According to the government, the new rules are a step forward, providing increased transparency and consistency no matter which body is handling a complaint.
Up to now, the Ombudsman for Banking Services and Investments (OBSI), an independent organization supported by the financial industry, has been been responsible for sorting out consumer complaints about banks, but it’s come under criticism from some lenders for being to costly and at least two — the Royal Bank of Canada and Toronto-Dominion Bank — have abandoned it in favour of their own processes.
Critics say that has resulted in an uneven patchwork process that is unfair to consumers, because it gives banks the ability to shop around for the adjudicator of their choice.
The problem is, the new system will not be that different — there will still be more than one complaint resolution body and at the end of the day decisions still won’t be binding.
In November the shareholder and consumer advocate group FAIR Canada publicly urged the government to compel banks to resolve all consumer disputes through OBSI.
In a letter to Mr. Flaherty, FAIR demanded that OBSI be made the sole mediator for the financial industry and that its decision be made binding. To allow banks to chose their own mediators “jeopardizes the fairness and independence enshrined in the current system,” the letter said.
Formed in 1996, OBSI is currently the only independent dispute resolution provider in the financial services industry. However, membership is voluntary. Financial legislation does not require banks to go through OBSI and over the last several years at least two banks have opted
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Canada: Ottawa Lays Out New Rules for Consumer Complaints Against Banks Finance Minister Jim Flaherty has announced new rules aimed at bolstering the consumer complaint process for banks which has come under pressure in recent years from the industry
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