A consumer advocacy group says that the federal government’s proposed new regulations for banking complaints are not as consumer friendly as they should be.
Yhe Canadian Foundation for Advancement of Investor Rights (FAIR Canada) allows that the regulations, which were proposed last week, setting standards for external dispute resolution bodies, do represent progress for consumers. FAIR notes that regulations are a step in the right direction, as they will establish requirements for these services, which don’t currently have any; and, they will promise oversight to ensure compliance with these new standards.
However, FAIR stresses that the proposals fall short of being “pro-consumer” on a number of counts. It points out that, under the regulations, consumers don’t get to choose a dispute resolution service provider, they must use the service chosen by the bank.
It notes that there is no requirement that the external complaints body be truly independent. “The regulations permit a non-independent body and only require that the individual who hears a particular complaint be impartial and independent,” it says.
FAIR also worries that allowing competition among dispute resolution service providers will harm consumers. “Competition will mean that banks will receive more favourable service from the suppliers. This will lessen the focus on fairness to consumers, as there will be no reason for competition to entice consumers to use a service provider. This competition for banks’ business will not benefit consumers,” it says.
Finally, FAIR warns that opening up banking dispute resolution to multiple for-profit firms “will reduce consistency in decision-making and could contribute to increased consumer confusion about the dispute resolution process.”