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OTTAWA – July 6, 2012 – The Public Interest Advocacy Centre (PIAC) today condemned the Minister of Finance’s publication of draft regulations for “external complaints bodies” under the Bank Act. The new rules are weak and allow multiple consumer banking arbitration services, thereby destroying the Ombudsman for Banking and Investments (OBSI) which had resolved consumer complaints well.
“The regulations require these external complaints providers to have people who are working on complaints be “impartial and independent of the parties” but everyone knows the banks will choose a provider that gives them favourable results,” stated John Lawford, Counsel for PIAC. “It makes no difference that the arbitrator assigned is not a bank employee – the fundamental conflict of interest is there and consumers can expect poor results and less compensation when wronged by their bank.”
PIAC notes that the Financial Consumer Agency of Canada (FCAC) is to provide oversight of the new banking dispute resolution services, but FCAC may only review the services once every five years and it is not clear what authority FCAC possesses to “de-authorize” or otherwise oversee an arbitration service.
“Consumers are often confused by multiple arbitration systems, which have been condemned as inefficient by the World Bank and G20,” continued Lawford. “The regulations require reporting by the new services and PIAC will monitor consumers’ experiences with them with a view to de-authorizing any poor actors.”
For more information, please contact:
Public Interest Advocacy Centre