Canada’s financial consumer watchdog says customers of the Big Six banks are being hit with delays and complications when they try to escalate complaints and that most simply give up.
In a review released on Wednesday, the Financial Consumer Agency of Canada (FCAC) found that while banks resolve 76 per cent of complaints quickly and to the consumer’s satisfaction, consumers face delays and complications when escalating their complaint beyond the first point of contact – usually a customer service representative in a branch or call centre.
As well, the FCAC estimates that more than 90 per cent of consumers whose complaint was not resolved to their satisfaction at the first point of contact did not escalate their complaint to a higher level of management – or an external organization for review – suggesting the escalation process is not straightforward or easy for consumers.
“Escalation procedures put the onus on consumers to navigate a complex system that is slow and cumbersome, resulting in a significant proportion of these consumers becoming dissatisfied and abandoning their complaint,” the FCAC said.
This is the first review on complaint procedures the FCAC has conducted, and it estimates that consumers make more than five million complaints to banks a year.
The review mimics consumer concerns heard by John Lawford, executive director at the Public Interest Advocacy Centre, a non-profit organization that provides legal services on behalf of consumers interests.
"This is what consumers tell us every day, which is banks don’t take client complaints seriously and banks don’t do enough to resolve them,” Mr. Lawford said in an interview. “The banks don’t have adequate resources to deal with the complaints they receive, and in the end [complaints] are addressed slowly on purpose so that people will drop their complaint in the end.”
The review of how Canada’s Big Six banks handle customer complaints comes at a time when consumers are beginning to pay closer attention to the financial products and fees they are paying. The review, which was conducted between November, 2018, and June, 2019, was requested by the federal Minister of Finance in the 2018 Fall Economic Statement after an earlier review on sales practices identified concerns about banks’ complaint handling procedures.
“A critical element in a well-functioning financial system is an efficient and effective method for consumers to get their problems resolved,” FCAC commissioner Judith Robertson said in a statement.
In Canada, the resolution system for bank complaints uses a combination of internal handling procedures and external complaint bodies.
The Canadian Bankers Association says its members – which include the Big Six banks – were “pleased to participate" in the review and will “carefully consider the findings of the report.”
“Ensuring high customer satisfaction with banking services and providing an effective mechanism for resolving differences is a longstanding priority for banks in Canada,” a CBA spokesperson said in an e-mail to The Globe and Mail.
A big portion of customer complaints include issues preventing access to funds, banking fees, transaction errors and unauthorized access to funds or fraud in an account. More complex complaints that were escalated range from issues with mortgages, deposit accounts and sales practices at the banks.
Mr. Lawford says the Finance Minister needs to step in and overhaul the banks complaints system.
“The FCAC doesn’t have the tools to deal with this oversight,” he said in an interview. “The minister needs to get involved. I think ripping it out and starting again with regulations on how they handle complaints is totally justified.”
The review found that 73 per cent of Canadians who experienced a problem with their bank contacted the bank directly about the issue. However, 41 per cent reported at least one barrier when attempting to get their complaint resolved.
Part of the problem, the FCAC says, is that most consumers are unaware of external complaint bodies that handle escalations, such as the ADR Chambers Banking Ombuds Office (ADRBO) or the Ombudsman for Banking Services and Investments (OBSI).
The FCAC says it will require both banks and external complaint organizations to do more to inform consumers about their right to escalate complaints.
Sarah Bradley, Ombudsman and CEO of OBSI, said the organization would work with the FCAC to “further enhance” their services and "better meet " their public service mandate.
The length of time it takes to resolve a complaint has been a key issue.
For the majority of cases, external bodies must provide a consumer with a resolution or final recommendation within 120 days of opening the investigation; however, the FCAC expects most complaints to be resolved “more quickly.”
From the time a consumer first submits a complaint to an external body, the FCAC found that it took ADRBO 156 days and OBSI 112 days to propose final recommendations.