Finance Committee on Nov. 5th, 2018

[The Chair, Liberal, Wayne Easter]

Thank you all.

Mr. Kmiec

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I just want to go back to two things. With a typical bank, when would a complaint go to this external complaints body, and who would take it there? Would it be the bank or the consumer?

[Eleanor Ryan]

What normally happens is the customer complains directly to the bank. It could be to a staff member. It could be to a manager. We call that the first level of the complaint. I think the goal is for the bank to resolve those complaints with a customer at that first instance.

If a complaint is not resolved, it could be bumped up to some level within the organization, and a second set of eyes within the bank would look at it. Normally about 90% of complaints are resolved within the bank. There are some complaints for which the customer is not happy with the outcome recommended by the bank. In such cases, it is the customer who decides whether they want to take that to the external complaint body or accept the bank's recommendation.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

In that process, it is the customer who can go to an external body and say, “I pick this external body to review,” and now you're proposing these different rules by which they would report the complaint, make it public and just set some standards for this.

[Eleanor Ryan]

Right. If I may, it is indeed the customer who chooses whether to take the complaint to the external complaints body. If I could clarify one aspect though, each bank must be a member of one external complaints body, so the customer goes to the external complaints body that the bank is a member of.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

The customer doesn't get to pick. The bank has already picked it because if they have to be a member of just one....

I have a constituent. I know a got an email on something like this, so I just looked up her complaint about the complaint process. If the chartered bank is a member of one complaint body, the customer has no choice after going through the internal process but to deal with the body that the bank has already chosen.

Is that a competitive process for the banks typically? Are these external complaints bodies businesses? Are they not-for-profits? Are they just a panel of people?

[Eleanor Ryan]

There are two external complaint bodies that have been approved by the minister for the banks to be members of, and each of them has been reviewed by the commissioner and the Financial Consumer Agency of Canada. They have to meet standards set out in the legislation and the regulations. Once they're approved, they have to continue to meet the standards.

They could be a non-profit, and I do believe one of them is.

[Brigitte Goulard]

Yes.

[Eleanor Ryan]

They could be a business corporation, and I believe one of them is. There are different models, but they all have to meet the same standards.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

The same standards, right, but if the bank chooses not to be a member of more than one, then the consumer doesn't have a choice. They have to go to the one the bank has selected for whatever reason. Now you have some rules that dictate how this external complaint body is supposed to work, but the consumer doesn't have a choice in this. They have to go with the one the bank—

[Eleanor Ryan]

Yes, I'm agreeing with you.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Unless the bank has more than one....

Is that typical or is it atypical for banks to have more than one?

[Eleanor Ryan]

No, I'm sorry. Each bank may be a member of only one external complaints body, and then the consumer uses that external complaints body.

To confirm, it is correct, as you indicate, that the consumer does not choose which body to use.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

It just seems to me that it doesn't really make much of a difference whether that's an internal bank process or external because it's still the same.... The bank has preselected a group of people to do it already. They may have rules upon them, but OSFI has rules upon banks, how they behave, and the rules that they abide by. It seems like a lot of shifting around, but it doesn't achieve the goal of giving the consumer more control about where the complaint goes.

I'm going to move on to something else.

Ms. Goulard, you answered Mr. Fergus' question on the number of penalties. You skated around a bit, but you said that a number of compliance agreements were established with the banks.

Can you tell us more about that?

[Brigitte Goulard]

You are very astute. You noticed that I was skating around a bit as to the number of penalties we issued. The reason is that at this time some of them may be appealed, and others are just being drafted. It is for reasons of administrative law that I did not want to provide a specific number.

To get back to your question, I would say that at this time we can conclude compliance agreements with certain banks when they breach the law. In that way we want to ensure that they put in place the necessary controls and that they comply with the law.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Very well, thank you.

[Brigitte Goulard]

I fudged a bit, but did I answer your question?

I'd like to give you more information in reply to your question about external complaint processing organizations. Our role is a supervisory role. The situation is a bit different when an individual submits his problem to the bank only. If he or she calls on one of the external complaint processing bodies we supervise to ensure that certain standards are respected, the process is a bit different.

Moreover, if there is a breach of the law, the consumer can submit a complaint to us on that. We can't do anything if a person is upset because a branch is dirty, for instance, but if there is a possible violation of one of the provisions of the act, the consumer can send us a complaint. We can then launch an investigation if that proves to be necessary.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Okay.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

The question that begs to be asked is how many times that has happened last year or in the past five years. Can you give us some idea?

[Brigitte Goulard]

You want to know what happened...

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Can you give us some idea of the number of times Canadians resorted to an external complaint processing body, and then turned to you?

[Brigitte Goulard]

I do not have that figure, but I could send it to you. It may be difficult, because in some cases people come to us without telling us that they already submitted their complaint to an external complaint processing body. Sometimes they contact us before calling on an external complaint processing body. When the complaint is not necessarily linked to a breach of the legislation, we refer them to...

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I expect that you have data on the number of times people submitted complaints to the system, as per the process, either with the banks...

[Brigitte Goulard]

I have data on the number of complaints we receive every year and on the topic of those complaints, but I do not have data specifying which complaints went through the external system before being submitted to us. It will be my pleasure to provide that information to you.