Ottawa is aiming to clear up the confusion dogging the treatment of consumer complaints against banks by proposing new regulations, which would establish standards for organizations that provide third-party dispute resolution.

The regulations proposed Friday would establish some standards that external complaints bodies must meet, which will be monitored by the Financial Consumer Agency of Canada (FCAC). The proposals aim to enhance the process for dealing with complaints by ensuring that dispute resolution services are “accessible, accountable, impartial and independent” and that they operate in a “transparent, effective, timely, and cooperative” way.

The proposed rules come in the wake of Royal Bank (TSX:RY) and TD Bank (TSX:TD) pulling out of the service provided by the Ombudsman for Banking Services and Investments (OBSI) over the past few years, and hiring their own external dispute resolution providers — a move that drew a great deal of criticism from OBSI, and from consumer advocates, who argued that membership in OBSI should be mandatory for banks, as it is for investment firms.

Finance Minister Jim Flaherty hailed the proposed new rules, saying, “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. 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.”

In announcing the new regulations, Finance indicated that as a couple of banks have left OBSI, this has led to a “variation in procedures used and uncertainty for consumers”. It is aiming to correct this requiring banks to belong to federally-approved external complaints bodies; and, setting standards for those bodies, to be enforced by the FCAC. Under the proposed rules, the FCAC will review all external complaints bodies prior to their consideration for approval by the finance minister, and then monitor them on an ongoing basis and enforce compliance with these new standards.

The regulations are being released for a 30-day comment period.