Decision #112

From: Financial Consumer Agency of Canada

Commissioner's reasons for decision

File: XXX-XXXXX

(FCAC ACT, subs. 23(2))

In June 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.

Sections 4, 5 and 9 of the Notice of Branch Closure (Banks) Regulations state:

4. (1) The notice must be given to the Commissioner in writing no later than

(a) four months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in

(i) an urban area, or

(ii) a rural area where there is a retail deposit-taking branch within a travelling distance of 10 km from the branch; or

(b) six months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in a rural area where there is no retail deposit-taking branch within a travelling distance of 10 km from the branch.

Information to be included

   (2) The notice must include the following information:

(a) the location of the branch;

(b) the date proposed for the closure of the branch or the cessation of the activity;

(c) alternative sites where, after that date, customers of the branch may obtain services similar to the financial services that are provided at the branch, or a telephone number that customers may call to be informed of those sites;

(d) the measures, if any, that the member bank is taking to maintain any financial services that are available in the area that is served by the branch, to the extent that that information is available; and

(e) how the member bank may be contacted in respect of the proposed closure of the branch or cessation of the activity.

5. (1) If the branch is in an urban area, or in a rural area where there is a retail deposit-taking branch located within a travelling distance of 10 km from the branch, the notice must be given to the customers of the branch and to the public.

    (2) The notice must be given no later than four months before the date proposed for the closure of the branch or the cessation of the activity.

    (3) The notice must be given by

(a) posting it in a conspicuous place in a public area of the branch; and

(b) sending it to each customer of the branch

i. by mail, either included with a regular account statement or in a separate mailing, or

ii. by electronic means, if the customer regularly receives material from the member bank by electronic means.

    (4) The notice must include the following information:

(a) the location of the branch;

(b) the date proposed for the closure of the branch or the cessation of the activity;

(c) alternative sites where, after that date, customers of the branch may obtain services similar to the financial services that are provided at the branch, or a telephone number that customers may call to be informed of those sites;

(d) the address of the branch to which the member bank will transfer the customers' accounts;

(e) the measures, if any, that the member bank is taking to maintain any financial services that are available in the area that is served by the branch, to the extent that that information is available;

(f) how the member bank and the Commissioner may be contacted in respect of the proposed closure of the branch or cessation of the activity; and

(g) a statement that the Commissioner may require the member bank to convene and hold a meeting between representatives of the member bank, representatives of the Agency and interested parties in the vicinity of the branch, in order to exchange views about the proposed closure of the branch or cessation of the activity, if

(i) 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 or the cessation of the activity,

(ii) 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

(iii) the request is not frivolous or vexatious.

9. 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:

(a) 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;

(b) 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

(c) the request is not frivolous or vexatious.

Facts

The bank has decided to close its branch located in a small town effective September 2011. The nearest branch (the “receiving branch”) is located approximately 250km from the closing location. There are no other financial institutions closer to the closing branch.

The Financial Consumer Agency of Canada (FCAC) received one meeting request, from a retail branch customer. The main concerns raised by the customer were:

  • the next closest branch is approximately 250km away.
  • the customer wanted a meeting to discuss the move and the effect it will have on the community
  • the customer wanted the bank to explain if it will service the community with a bank ATM machine that does not cost their customers for every transaction

In addition, as of May 2011, the bank had received 3 customer contacts seeking to determine what alternative banking procedures would be made available on the branch's closing. None were escalated to its headquarters. According to the bank, only one customer expressed discontent with the decision to relocate its operations to the receiving branch.

Position of the Bank

The bank believed that it had complied with sections 4 and 5 of the Regulations as adequate notice was given to the FCAC Commissioner, consumers, the local government, the town's primary employer and the general public of the pending branch closure.

The bank also believed that it had 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 March 2011.

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

  • Bank representatives, including the branch manager, conducted a Town Hall meeting in the community in May 2010 to address concerns about the bank eliminating the Sales Officer position due to declining volume. Local Management was reaching out to the community to grow its business. The only decision made at that time was to relocate the Sales Officer position to the receiving branch. The meeting was attended by approximately 50 people.
  • Bank representatives met with key community representatives to discuss the closure:
    • The Executive Assistant to the MP in February 2011.
    • The Executive Assistants to the two local provincial legislators in February 2011.
    • Senior executives of the town's primary employer.
  • Bank representatives met with the branch staff of the closing and the receiving branches in February 2011 to advise them of the closure date.
  • Notification of the branch closure was displayed at the closing branch in March 2011.

Furthermore, the bank informed FCAC that it had 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 of its branches.
  • Safety deposit boxes will be securely moved to the new branch location unopened.
  • The bank is assisting its customers with alternate channel banking facilities, ranging from direct deposits arrangements, telephone, internet and mobile banking.

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 received a meeting request from community representatives and there is no evidence that the request was 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, and Small Business. The closest other financial institution present in the community is located approximately 250km from the closing branch.

In May 2010, the bank did hold a town hall meeting regarding the bank's decision to eliminate the Sales Officer position and to inform the community that customer needs will continue to be met through periodic visits of a Sales Officer from the receiving branch, telephone contact and the use of alternate channel banking. A significant number of residents attended that meeting. At that time, the bank confirmed that the remaining two customer service staff would still be there to meet day to day banking needs.

The bank subsequently made a decision to close the branch, but did not hold a meeting to discuss the closure. 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. This is especially true when there are no plans by the bank to maintain an ATM in the community, and no other financial institutions closer than the approximately 250km to the receiving branch. The number of residents attending the meeting in May 2010 concerning the relocation of the Sales Officer was an indication of the interest in the community about the future of the branch.

Therefore, 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. Accordingly, I have 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 has been granted. I have 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, August 22, 2011

Ursula Menke

Commissioner

Financial Consumer Agency of Canada​​​

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