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rob carrick

Along with profits and dividends, customer complaints are rising in the world of big banks.

In the last couple of years, complaints to third-party agencies that investigate disputes between banks and their clients have risen significantly. Customers are standing up for themselves, which is great to see. Rising complaint levels apply pressure for better bank behaviour.

Banks have been delivering strong financial results despite facing sharpened competition on all fronts – savings and chequing accounts, mortgages, mutual funds and investment management. But their behaviour in producing profits and dividends has come under scrutiny as a result of CBC reports in which tellers at Toronto-Dominion Bank spoke of the pressure they're under to sell products to customers. Some say they have gone as far as signing people up for products they didn't ask for, which is against banking industry laws.

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Both TD and Royal Bank of Canada use a service called the ADR Chambers Banking Ombuds Office (ADRBO) to look into customer complaints the banks themselves cannot resolve to the client's satisfaction. The fiscal 2016 annual report from ADRBO shows there were 626 inquiries about TD that resulted in 148 complaint files being opened. RBC generated 401 inquiries and 77 complaint files. Both of these banking giants together generated 36 per cent more new complaints than in 2015.

Complaints against other banks are handled by the Ombudsman for Banking Services and Investments. OBSI chief executive Sarah Bradley said bank-related complaints are up about 29 per cent over the past two years, but people being signed up for products they didn't agree to is not a big factor.

"That's an allegation that raises serious concerns and we would certainly take that kind of complaint very seriously," she said. "But to be frank, I don't think we've seen very many complaints with that allegation."

ADRBO ranks the top complaints as poor customer service (excluding mortgages), how the bank dealt with credit/debit card fraud, and mortgage complaints relating to bad service or advice. OBSI has in the past singled out fraud and mortgage prepaying penalties as examples of its leading complaints. The federal Financial Consumer Agency of Canada also takes complaints – it says credit-card cost of borrowing, disclosure of account charges and mortgages are top issues.

The procedure for complaining about a customer service issue at a bank is to first try and resolve the matter with frontline staff. Escalate as required to senior staff, and the bank's own internal ombudsman. If you're looking for financial compensation, the next step is to take the matter to ADRBO for TD and RBC, and OBSI for other banks. OBSI also handles investment disputes.

Both agencies tend to resolve matters in favour of the banks. OBSI says 22 per cent of banking complaints resulted in financial compensation for a customer in 2015, while ADRBO's numbers show its final reports ruled in favour of the complainant in 13 per cent of cases involving RBC and 16 per cent of cases involving TD (a few other decisions were split between bank and client). ADRBO declined to comment on the fact that TD is ahead of RBC in generating complaints, even though the two banks are of roughly comparable size in terms of assets and market capitalization.

A TD spokeswoman said an important factor for the bank is that ADRBO agrees with TD's own ombudsman 90 per cent of the time. This includes not just complaints that are investigated, but also matters where the ombudsman decides an investigation isn't required.

Despite the recent jump in complaints from customers, the level of unhappiness with the big banks is as low as I've seen it in my years of writing this column. In TD's case, it was tellers who spoke out against sales tactics, not customers. In a conversation on my Facebook personal finance page this week, there were plenty of generally positive comments about TD and other banks.

So what's driving the increase in banking complaints to OBSI and ADRBO? OBSI believes banks are doing more to publicize the existence of third-party dispute resolution services. It also notes that new federal rules allow people to pursue complaints with an outside ombudsman if they haven't had a decision from their bank in 90 days. In today's competitive marketplace, banks may also be getting more aggressive about selling products to customers.

Whatever the reasons, the rising trend in complaints draws attention and makes banks accountable. Don't just complain, though. As a recent column noted, the best way to respond to bad behaviour by the banks is to send your business to their competitors.