The Consumers Council of Canada says that the Canadian banking industry should have a single, regulated, independent dispute resolution service.
In a new report, the Consumers Council examines the recent proposals from the federal Department of Finance for increasing oversight of dispute resolution in the banking industry, and concludes that consumers would be best served by a single, independent provider, rather than the fragmented process that has emerged, and Finance has implicitly endorsed.
Earlier this year, Finance proposed new minimum standards for dispute resolution providers and plans for increased oversight by the Financial Consumer Agency of Canada (FCAC). This riled consumer advocates who had been hoping that the government would require all of the banks to belong to the Ombudsman for Banking Services and Investments (OBSI), which had been the sole provider, but has suffered two significant defections (Royal Bank and TD Bank) in recent years.
Now, the Consumer Council is lining up with those other consumer advocates. It says that it has told Finance and the FCAC that it favours a single provider, and it says that the approach to dispute resolution and redress offered by OBSI “better protects the rights of consumers and makes it easier for consumers to manage their responsibilities” than the alternative method offered by RBC and TD.
Indeed, it concludes that the process being used by RBC and TD “does not meet agreed-upon minimum standards, has not had an appropriate level of involvement in its development by consumers, government regulators or industry self-regulators.”
Additionally, it argues that regulatory change in this area requires lengthy, detailed public consultation. And, in the meantime, it says that all banks should be required to belong to OBSI.
If that’s not the case, it says that the FCAC’s priorities should be to: assert and assume its new responsibility for improving the internal dispute resolution of banks; and, develop a processes for monitoring dispute resolution and redress decisions, and for monitoring and responding to systemic issues revealed by both internal and external dispute resolution processes.
It also says that research is needed to determine the resources that the FCAC will need to properly oversee dispute resolution; and, that public consultation to develop the standards, rules and penalties to be used by FCAC should be undertaken, with the government financing input from independent consumer advocates.
The Consumers Council says that following these recommendations “would help protect consumers from an unnecessarily confusing, complicated and increasingly costly situation created by the unreasonable actions of two banks.”