FCAC Supervisory Highlight: Thematic Review on Complaint Handling

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Cat. No.: FC5-99/2025E-PDF (PDF, English)

ISBN: 978-0-660-78321-5

© His Majesty the King in Right of Canada, as represented by the Minister of Finance Canada, July 2025.

Aussi disponible en français sous le titre: Faits saillants de la surveillance exercée par l'ACFC : Examen thématique du traitement des plaintes

Introduction

This report summarizes FCAC’s thematic review of the banking sector’s compliance with the legislative obligations for complaint-handling procedures (CHP), and their corresponding guideline.

The CHP obligations came into force on June 30, 2022, as part of the Financial Consumer Protection Framework (the Framework).^{Note de bas de page 1}  The Framework was a milestone in consumer protection in Canada. For CHP, banks are required to create a record of a complaint under an expanded definition of “complaints” in the Bank Act, and to deal with complaints within a maximum of 56 days of receiving them. This is the first time that banks are legally required to deal with complaints within a specific period. If a complaint remains unresolved after 14 days, banks must internally escalate the matter to a designated employee^{Note de bas de page 2}  who possesses the experience, competencies, and authority required to deal effectively with more complex complaints.^{Note de bas de page 3}  When a complaint is resolved by a designated employee or closed by any bank employee, banks must provide consumers with a substantive written response outlining the final decision and any offer from the bank.

Banks are also required to report to FCAC, within 60 days of the end of each fiscal quarter, all complaints that have been handled by their designated employees. This ensures that FCAC is aware of the types of complaints that banks are receiving and how long banks are taking to resolve them.

Scope and methodology

The thematic review was undertaken with 6 small and medium-sized banks (SMSBs) whose selection provided for a representative sample of the size, business models, and regional presences of SMSBs.

The scope of the thematic review focused on the following CHP-related requirements:

1. The requirement for banks to make a record of a complaint when it meets the definition of a complaint in the Bank Act.
2. The requirement for banks to deal with complaints within 56 days of receiving them.
3. The requirement for banks to refer complaints to designated employees if complaints are not dealt with within 14 days of receiving them.
4. The requirement for banks to submit reportable complaints to FCAC within 60 days following the end of each fiscal quarter.
5. The requirement for banks to provide a substantive written response to a consumer when their complaint is resolved by a designated employee or closed by any bank employee.

As part of the review, FCAC required all SMSBs to complete a questionnaire to assess their implementation of CHP requirements. For the 6 banks selected for further analysis, FCAC conducted a detailed desk review of complaint-handling information and documentation provided by the banks, supplemented by virtual and on-site interviews to gain deeper insights into their practices.

The findings in this report are based on data and information provided by the 6 SMSBs over an 8-month period. The findings do not reflect any changes these banks may have implemented following the review period.

Findings

FCAC’s key findings from the thematic review are listed below. All banks, both SMSBs and major banks, are expected to review and address the findings as required.

Requirement to create and retain complaint records

FCAC found that bank employees did not fully understand the expanded definition of “complaints,” resulting in incomplete record-keeping.

• Some banks trained their employees to distinguish between an expression of dissatisfaction and a “formal” complaint, leading to records being created only when consumers explicitly identified their issue as a “formal” complaint.
• Some banks did not review their complaint records.

FCAC expectations

• Banks must create and retain records for all complaints, as required by the definition of complaints.
• Banks must review their complaints on a regular basis, to help identify systemic issues.
• Banks must ensure sufficient resources are allocated to deal with complaints efficiently.

Requirement to refer complaints within 14 days

FCAC found that the 14-day referral process was included in the banks’ policies and procedures and was well understood by all employees. Non-designated employees were encouraged to refer complaints to designated employees in less than 14 days if they believed they could not deal with the complaint themselves (for example, if the non-designated employee found the complaint to be too complex or that it required access to information the employee did not have).

FCAC expectations

This finding is in keeping with FCAC expectations. Banks are expected to continue to adhere to the requirement of referring complaints to designated employees within the 14-day period.

Requirement to deal with complaints within 56 days

FCAC identified multiple instances where banks failed to deal with complaints within the required 56 days timeframe. The findings of particular concern are as follows:

• Some banks had inefficient internal policies and procedures, requiring consumers to navigate multiple levels. Time was lost transferring complaints between functions, with each function requiring time to review the complaint.
• Some banks did not have a structured internal referral process to ensure complaints moved smoothly between non-designated and designated employees.
• Some designated employees did not have direct access to complaint records.
• Some banks practiced “freezing of the clock” on the 56-day timeline, meaning that the bank stopped counting the days while they were waiting for a response from the consumer.
• FCAC found that some banks excluded their senior-most designated employee responsible for dealing with complaints from the 56-day period.

FCAC expectations

• The 56-day timeline must remain continuous and cannot be paused for any reason. The timeline begins on the day after a complaint is received by the bank.
• Banks must establish effective internal policies and procedures for dealing with complaints in a timely manner. When reviewing their existing policies and procedures, banks should seek to limit the number of complaint-handling levels, streamline internal referral processes, and ensure appropriate access to complaint records.
• Banks must ensure that the 56-day period for dealing with complaints accounts for all levels of internal complaint-handling, including the senior-most designated employee of the bank.

Requirement to report complaints to FCAC within 60 days

FCAC found that most banks lacked internal policies and procedures for accurately reporting their quarterly complaints report (QCR) to FCAC.

• Most banks did not have policies and procedures for validating their QCR data before submitting it to FCAC, raising concerns about the integrity and accuracy of the reports.
• Most banks’ QCRs included complaint records that were missing required information, including the description of the complaint and the actions or investigative steps taken by the bank to deal with the complaint.

FCAC expectations

• Banks must establish comprehensive internal policies and procedures that account for the entire QCR process.
• Employees’ roles and responsibilities must be clearly defined, ensuring that reporting obligations are properly documented, well understood, and consistently followed.
• Banks must ensure that all complaint records include all required information.

Requirement for a substantive written response

FCAC found that complaints closed by an employee other than a designated employee within the 14-day period did not always generate an SWR.

FCAC expectations

• Banks must provide complainants with a SWR for all complaints, except those resolved by an employee other than a designated employee.

Controls

FCAC found that most banks were not effectively monitoring, testing, and reporting on complaint-handling requirements.

• For most banks, complaint records can be updated or modified inappropriately or inadvertently at any time during an investigation. Banks did not review their complaint records to monitor whether they had been inappropriately or inadvertently accessed or modified.
• FCAC found that some banks had instituted an alert system to provide employees with an early notification, in the aim of ensuring that the overall 56-day period for dealing with complaints was met. However, banks that were generating this alert on day 55, for example, were not providing sufficient time to address those complaints within the 56-day requirement.

FCAC expectations

• Banks must ensure that controls are created and monitored to minimize the risk of inappropriate or inadvertent complaint-record access or modification.
• Banks must ensure that internal notifications are received early enough to guarantee employees deal with a complaint within the prescribed 56-day period.

Third parties

FCAC found that some banks offer products and services in conjunction with a third party without ensuring that consumer provisions are complied with.

• Banks that offer products and services, such as credit cards, through third parties must ensure all applicable consumer provisions are complied with. This would include arrangements where a bank features its branding or logo on the product or service, or provides access to the product from the bank’s website. In such cases, the bank must ensure that all applicable consumer provisions are complied with, including but not limited to the protections relating to the disclosure of the cost of borrowing, and complaint handling.

FCAC expectations

• Banks must ensure that, in cases where they work with a third party to offer or sell financial products and services to consumers, they do so only subject to compliance with all applicable consumer provisions.
• Banks must have the necessary contractual and other safeguards, controls, and mitigation strategies (for example, access to information on third party practices) through the agreement with the third party and have specific policies and procedures in place for monitoring compliance.

Conclusion

Thematic reviews are one of many tools used by FCAC to assess compliance as part of its risk-based approach to supervision. This review—the second conducted by FCAC since implementing thematic reviews as a supervisory instrument—was productive, and yielded several findings that are relevant for industry and consumers.

In addition to this report, each of the 6 banks that participated in this thematic review received individualized feedback detailing FCAC’s findings specific to their institution. These banks are required to implement the corrective actions to address the identified gaps, and FCAC is actively monitoring their progress to ensure full compliance.

All Canadian banks are expected to review the findings presented in this report, assess their compliance with the complaints handling requirements, and address any issues or deficiencies in a timely manner.