Decision #109

From: Financial Consumer Agency of Canada

Commissioner's Reasons for Decision

(FCAC ACT, subs. 23(2))

File: XXXXX-XXXXX

In March 2011, I issued and caused to be served on the bank a Notice of Request for a Branch Closure Meeting pursuant to subsection 459.2(2) of the Bank Act. The notice stated:

...it is my view that the bank did not consult the community affected by the closure well enough to ascertain the views of all interested persons with regard to the closure. Therefore, I require the bank to convene and hold a meeting for the proposed branch closure...

Applicable legislation

Subsection 459.2(2) of the Bank Act states:

After notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner shall, in prescribed situations, require the bank to convene and hold a meeting between representatives of the bank, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities, including, but not limited to, alternative service delivery by the bank and measures to help the branch's customers adjust to the closing or cessation of activities.

Section 9 of the Notice of Branch Closure (Banks) Regulations states:

For the purpose of subsection 459.2(2) of the Act, the following circumstances are prescribed as circumstances in which the Commissioner shall require a member bank to convene and hold a meeting referred to in that subsection:

  1. the member bank has not consulted the community in the area affected by the closure of the branch or the cessation of the activity well enough to ascertain the views of interested persons in the community with regard to the closure of the branch, the cessation of the activity, alternate service delivery by the bank or measures to help the branch's customers adjust to closing or cessation;
  2. an individual or a community representative from the area affected by the closure of the branch or the cessation of the activity submits to the Commissioner a written request for the meeting; and
  3. the request is not frivolous or vexatious.

Facts

The bank has decided to close its branch located in a small town effective June 2011. The branch will be merging its operations with another branch located approximately 50km from the closing location.

The Financial Consumer Agency of Canada (FCAC) received two meeting requests, one from a retail branch customer and one from a community official. The main concerns raised by the complainants are:

  • the bank has been part of the community more than 100 years.
  • the move will leave the town and surrounding areas without a bank.
  • the receiving branch is approximately 50km away.
  • there is no public transportation system between the town and the town of the receiving branch.
  • expensive taxi trips or reliance on the generosity of family and friends will be the only means for people to bank in the town of the receiving branch.
  • the majority of people will be greatly inconvenienced and it will cause serious financial hardship for seniors and lower income earners.
  • potential for decreased revenues for other businesses in the community has not been addressed by the bank. If customers travel to another community to bank, they will likely buy groceries, other items and services in that new community, to the detriment of the businesses and services in the town.

Furthermore, the town sent a survey to evaluate the impact of the pending bank closure. Ninety-three percent of respondents were existing customers of the branch. Many quoted “convenience and tradition”, as their main reasons to bank locally. A smaller number of respondents indicated that they banked locally out of necessity, because they did not have reliable transportation. Almost all of the respondents, ninety percent, use the teller services. Over two-thirds, or sixty-eight percent, did not or could not use home banking such as the internet or telephone banking.

Position of the Bank

The bank believes that it complied with sections 4 and 5 of the Regulations as adequate notice was given to the FCAC Commissioner, to consumers, the Mayor and to the general public of the pending branch closure.

More specifically, the bank believes that it complied with subsection 5(4) of the Regulations as the letter to customers included all the required elements. The bank sent the branch closure notice to clients in December 2010.

The bank informed FCAC that it has taken the following communication initiatives with the community in order to discuss the branch closure:

  • the bank's Regional Head and Branch Manager spoke with the Member of the Legislative Assembly.
  • the bank's Regional Head and Branch Manager spoke with Member of Parliament.
  • the bank's Regional Head and Branch Manager met with and delivered the notice of closure to the Mayor of the town.
  • the bank's Regional Head and Branch Manager met with the staff of the town to advise them of the closure date.
  • the bank's District Banking Manager met with the staff at receiving branch to advise them of the closure.
  • letters were mailed to all branch clients advising them of the forthcoming closure of the branch and branch signage was displayed at the branch.
  • notification of the branch closure was posted in the local newspaper.

Furthermore, the bank has informed FCAC that it has taken the following measures in order to help consumers adjust to the branch closure:

  • consumers are not required to transfer accounts or take any action with regards to the transfer of products or services held at the closing branch.
  • account numbers will remain the same and consumers will have full servicing capabilities at any bank branch.
  • a non-deposit ABM will remain in operation at the closing branch location. The ABM will accommodate withdrawals, bill payments, funds transfers, passbook updates and account balances.
  • the bank is assisting its customers with alternate channel banking facilities, ranging from direct deposits arrangements, telephone, internet and mobile banking.
  • the bank will automatically send its customers, who have ordered cheques within the past three years, a complimentary order of personalized cheques. For customers who haven't ordered cheques within the last three years, they will receive a free supply once requested.
  • the branch hours of operation of the receiving branch will be longer than the hours of the closing branch.

As of February 2011, the bank had received 39 customer complaints at the closing branch, three of which were escalated to its headquarters. An additional 17 concerns were raised directly to its headquarters. According to the bank, all concerns focus on customer discontent with the decision to relocate its operations to the receiving branch.

Considerations

According to section 9 of the Regulations, three conditions must be met in order for me to require a meeting:

  1. The bank has not consulted the community in the area affected by the closure (…) well enough to ascertain the views of interested persons in the community with regard to the closure of the branch (…)
  2. An individual or community representative from the area affected by the closure (…) submits to the Commissioner a written request for the meeting; and
  3. The request is not frivolous or vexatious.

FCAC has received two meeting requests from community representatives and no evidence exists that such requests are frivolous or vexatious.

Therefore, in order to make a recommendation on the need to hold a meeting, I must assess whether the bank has consulted the community in the area affected by the closure well enough to ascertain the views of interested persons in the community.

The closing branch accounts include Personal, Non-Profit Clubs and Associations Accounts. Small Business and Commercial Clients are managed out of the receiving branch. Furthermore, the closest other financial institution present in the community is located approximately 24km from the closing branch.

One of the meeting requests, from a community official, made clear the concern that the decision to close the branch was not preceded by consultation meetings in an effort to ascertain the views of interested persons about all aspects of the proposed branch closure. This reaction suggests that additional consultation is necessary to address concerns of individuals in the community.

Moreover, while the bank did speak with local politicians of all three levels of government, it did not consult with its customers or members of the community. It merely informed them of the prospective closing. It is important that consumers have the opportunity to discuss the branch closure with their bank, so that they are able to explore ways of easing any negative impact the closure may have on their lives and on the community as a whole.

Based on the foregoing, it is my view that the bank did not consult the community affected by the closure well enough to ascertain the views of all interested persons with regard to the closure. Therefore, I required the bank to convene and hold a meeting in the community for the proposed branch closure.

Decision

The request to call a public meeting was granted. I issued and caused to be served on the bank a Notice of Request for a Branch Closure Meeting pursuant to subsection 459.2(2) of the Bank Act.

Ottawa, May 10, 2011

Ursula Menke

Commissioner

Financial Consumer Agency of Canada

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