Failure to cash a federal government cheque
Bank Act, s. 458.1(1)
Access to Basic Banking Services Regulations, sections 6 and 8
The Financial Consumer Agency of Canada (FCAC) received a complaint from a consumer advising that a bank branch did not cash her federal government cheque because she had presented it after the normal working hours of the Cheque Redemption Control Directorate (CRCD). The amount of the cheque was less than $1,500 and, as such, was subject to the Access to Basic Banking Services Regulations. 1
The consumer, who was not a customer of the bank in question, had presented valid identification to cash the cheque as set out by the Regulations. Moreover, there was no evidence to suggest that the cheque had been tampered with. The branch, however, advised the consumer that it would need to call the CRCD to have the cheque verified and that it could only be cashed upon verification, the following day.
Subsection 458.1(1) of the Bank Act requires banks which are members of the Canada Deposit Insurance Corporation (CDIC) and which open retail deposit accounts through a natural person to cash Government of Canada cheques (up to $1,500) for non-customers who meet the requirements set out in section 8 of the Regulations.
Section 8 of the Regulations stipulates that an individual requesting a bank to cash a federal government cheque shall present to the member bank two pieces of valid identification or one piece of valid identification containing the signature and photograph of the individual.
The Acting Commissioner found that one violation of subsection 458.1(1) of the Bank Act had occurred, and imposed a penalty of $1,000. The bank paid the penalty, and FCAC closed the file.
As of September 30, 2003 all banks in Canada are required by the Access to Basic Banking Regulations to cash a Government of Canada cheque (up to $1,500) for non-customers who present valid identification. 2
The bank argued that the Regulations appeared to place certain obligations on the bank to ensure that a federal government cheque presented for cashing is valid, which, in turn, gives the bank the right to ascertain, using services such as the CRCD, if any of the conditions for refusing the cheque applied.
Section 6 of the Regulations sets out the circumstances under which a bank would not be required to cash a federal government cheque under $1,500 for a non-customer. These circumstances include evidence of tampering, counterfeiting or fraudulent activity. The Acting Commissioner determined that the cheque presented by the consumer should have been cashed, as there was no evidence to suggest that the circumstances set out in section 6 of the Regulations were present.
The bank also argued that the legislation does not limit the amount of time that the bank can take to verify the authenticity of a cheque. However, since the Regulations require the consumer to present a cheque in person, it is expected that the cashing process will occur within a reasonable time frame in keeping with the intent of the Regulations.
Measures taken by financial institution
As a result of FCAC’s intervention, the bank updated its policy manuals to clarify when and in what circumstances the cheque verification services offered by the CRCD should be used.
The Government of Canada implemented the Access to Basic Banking Services Regulations, among others, so that Canadian consumers could benefit from a greater access to basic banking services and strengthened consumer protection measures.
Canadians have the right to cash their Government of Canada cheques (up to $1,500) for free at any CDIC member bank, regardless of their relationship with the financial institution in question. Ensuring that non-customers are able to cash their federal government cheques is essential to improving access to basic banking services in Canada.
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