Decision #27731-483Q404

File: 27731-483Q404

Compliance issue

Accounts – Refusal to open a retail deposit account

Bank Act, s 448.1(1)
Access to Basic Banking Services Regulations, ss. 3(1)(a)(b), 4

A bank refused to open a retail deposit account because of prejudicial information on the customer's credit file. The consumer was provided with a written notice of refusal as per the Regulations. 

Subsection 448.1(1) of the Bank Act requires banks which are members of the Canada Deposit Insurance Corporation and which open retail deposit accounts through a natural person to open an account for consumers who meet the requirements set out in section 4 of the Regulations. 

Subsection 3(1)(a) of the Regulations stipulates that a bank may refuse to open a retail deposit account if the bank has reasonable grounds to believe that the account will be used for illegal or fraudulent purposes. 

Section 4 of the Regulations states that consumers can open a retail deposit account if they go to the bank in person and present acceptable identification.^{Footnote 1}  

Decision taken

A Letter of Reprimand^{Footnote 2} , noting one violation against the bank.

Compliance considerations

In the present case, the Commissioner noted that prejudicial information on a consumer's credit history does not, by itself, constitute reasonable grounds to believe that the account will be used for illegal or fraudulent purposes; nor will it automatically result in a refusal to open an account. 

In response to previous complaints regarding the same matter, the bank took immediate corrective action and demonstrated diligence in its efforts to review and update its account-opening procedures. The bank has not received any similar complaints since the implementation of the new procedures. 

Measures taken by financial institution

New processes and internal procedures have been implemented. The bank also notified FCAC that it would be contacting the consumer to offer to open a personal deposit account.

Outcome

The Government of Canada established the Access to Basic Services Banking Regulations because having​​​ a bank account is essential to the management of personal finances. Consumers who have access to a bank account are able to participate more effectively in the financial marketplace. As a result of the enforcement of the Regulations, the bank implemented new procedures for opening accounts and took measures to prevent any violation of the Regulations in the future.