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Elizabeth McLean in Vancouver on Jan. 12.Jimmy Jeong/The Globe and Mail

When Elizabeth McLean asked her local Bank of Nova Scotia branch to open an account to hold funds she planned to raise to sponsor an Afghan refugee, she was shocked by the answer. Her bank of more than 50 years declined her application.

More than five months after the initial rejection in March, 2020, and multiple complaints from Ms. McLean, Scotiabank said by e-mail that it would set up the account – but with a cap on deposits.

Ms. McLean, an 80-year-old retired public servant in Vancouver, eventually opened the account at another bank and successfully sponsored the refugee, a young man whose father had been murdered by the Taliban. But nearly three years later, she still has no clarity on why Scotiabank initially denied and then imposed a funding limit on her application.

When Ms. McLean escalated her grievance to the ADR Chambers Banking Ombuds Office, or ADRBO, a for-profit entity selected by the bank that reviews banking complaints, it upheld Scotiabank’s decision. In December, Scotiabank told her it would no longer respond to correspondence about the matter.

Ms. McLean’s experience points to the limits of protections for financial customers, including the lack of a single, independent external banking ombudsperson, according to consumer advocates.

“Bank accounts in Canada are not a right,” said John Lawford, executive director of the Public Interest Advocacy Centre in Ottawa. “It’s a retail relationship, and the banks can terminate it at any time.”

Federal rules require those who wish to sponsor refugees as private citizens to demonstrate they have the financial resources to support them during an initial settlement period in Canada. The funds must be deposited in an account at a Canadian financial institution.

Ms. McLean wanted to open the account at Scotiabank – jointly with another sponsor, as required by federal guidelines – to deposit money raised for the refugee through the crowdfunding platform, GoFundMe.

Although it was her first time acting as a sponsor, Ms. McLean said she was very familiar with federal requirements, having worked on several sponsorship applications as a member of the refugee committee of the Unitarian Church of Vancouver.

Scotiabank declined to comment on the specifics of the case, citing privacy reasons. But it said its customers can open in-trust accounts for the purpose of sponsoring a refugee with no deposit limits, provided government requirements and regulations are met. The bank also added that it accepts funds from crowdsourcing platforms, including GoFundMe.

In the correspondence reviewed by The Globe and Mail, the bank never indicated that Ms. McLean’s request to open the bank account lacked necessary information, violated government regulations or its internal policies or had otherwise raised red flags.

Ms. McLean said the experience left her feeling “furious” and “ashamed” for delaying the sponsorship application. The back-and-forth with Scotiabank pushed back her fundraising efforts for months, she said – a hindrance that was compounded by delays stemming from the onset of the pandemic, when Canadian embassies across the world suspended in-person interviews with refugees.

An added concern for her was the fact that the refugee was at the time based in Indonesia, where he wasn’t eligible for the government’s COVID-19 vaccination program.

While Scotiabank reversed its denial of Ms. McLean’s application in August, 2020, it said it would open an in-trust account for the refugee provided that “deposits from GoFundMe are not expected to exceed CAD$8,500.00.”

Ms. McLean didn’t want to accept that limit, which reflected her initial GoFundMe goal, because she couldn’t control how much money would be raised and wanted any extra funds to also go to the refugee.

Ms. McLean said she was also disappointed that ADRBO upheld Scotiabank’s decision in June, 2021.

“It’s just been so draining and so humiliating,” she said of the process of seeking redress for the way the bank managed her application.

Banking customers can turn to an external ombudsperson if their complaint is not resolved to their satisfaction in a timely manner. However, they must use the ombuds office of their bank’s choosing: either the Ombudsman for Banking Services and Investments (OBSI) or ADRBO.

While both receive funding from the banks, OBSI operates as a not-for-profit, while ADRBO is a for-profit entity whose level of service received a scathing review in a 2020 report by the Financial Consumer Agency of Canada.

While the federal Liberals proposed in their 2022 budget to create a single, non-profit ombudsperson to handle banking customer complaints, they have yet to do so.

For her part, Ms. McLean said she quickly raised funds in excess of $8,500 once she opened an account at another bank. The refugee has been living in Canada for almost a year and has a full-time job in the hospitality industry.

Ms. McLean said she no longer does her daily banking with Scotiabank.

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