Decision #110

From: Financial Consumer Agency of Canada

Commissioner's Reasons for Decision

(FCAC ACT, subs. 23(2))

File: XXX-XXXXX

On December 2009, 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

Financial Consumer Agency of Canada received a total of 33 written requests from members of the community requesting that I require the bank to hold a public meeting to discuss the proposed branch closure. The municipal council and members of the business community have made it clear they are concerned 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. The community reaction suggests that additional consultation is necessary to address concerns of individuals in the community.

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 Financial Consumer Agency of Canada Commissioner, 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 informed Financial Consumer Agency of Canada it has taken the following measures with the community in order to discuss the branch closure and alternative service delivery:

  • it met informally with the mayor of the municipality on September 2009
  • It met formally with the mayor and the town council of the municipality during a public town council meeting in September 2009, when the bank made a formal presentation about the branch closure and answered questions related to the decision to close the branch
  • the bank's regional vice president visited the federal member of parliament and the member of provincial parliament to discuss the branch closure
  • the bank initiated a proactive program to call the customers of the closing branch, starting with calls to commercial clients, then to senior citizens, then to clients who used the branch and lastly to clients who had not used the branch for an extended time
  • the bank explained that no automated banking machines (ABM) are currently present at the branch. The bank offered to discuss the location of an ABM in a business in the municipality; however, the bank states that local officials declined to meet with them to discuss the initiative. As a result, the bank does not currently have any plans to install an ABM following the closure of the branch.

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

  • the bank initiated branch seminars with customers to educate them on the benefits of telephone and internet banking alternatives.
  • it did not require consumers to transfer their accounts or take any action with regard to the transfer of products or services held at the closing branch.
  • it kept customers' account numbers the same; consumers will have full service at any of the bank's branches.
  • it did not require consumers to order new cheques, because it will automatically route all cheques to the receiving branch.
  • the receiving branch's opening hours are longer than the closing branch's.

The bank confirmed that as of October 2009, it had received 11 complaints regarding this branch closure, either in writing or via telephone. All of the complaints requested more information around the rationale for the closure and ultimately requested the bank continue its branch operations in this community.

Considerations

In monitoring the community's reaction to the closure, Financial Consumer Agency of Canada received 33 written requests from members of the community requesting that I require the bank to hold a public meeting to discuss the proposed branch closure. Similarly, the bank received 11 complaints regarding the branch closure. In determining whether a meeting was required for this branch closure, Financial Consumer Agency of Canada considered the following factors:

  • there are currently no ABMs at the branch and there are no plans to have an ABM accessible after the branch closure
  • the receiving branch is 25 kilometers away from the closing branch
  • no public transportation exists to transport consumers to the receiving branch
  • no other financial institution is present in the community
  • Financial Consumer Agency of Canada received a significant number of meeting requests from individuals in the community
  • from the communications received, it appears that the bank did not consult the branch's business customers.

Outcome

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. In the present case, Financial Consumer Agency of Canada determined that the bank had not consulted the affected community well enough to ascertain the views of the interested persons with regard to the closure of this branch.

Decision taken

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, January 8, 2010

Ursula Menke

Commissioner

Financial Consumer Agency of Canada

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