Decision #65331-177Q404

File: 65331-177Q404

Compliance issue

Cost of Borrowing, Credit Cards — Failure to provide a supplementary disclosure statement, on a regular periodic basis of at least once a month
Bank Act, s 452(2)(e)
Cost of Borrowing (Banks) Regulations ss. 12(5), 10(4)

A consumer contacted FCAC to report that, although he had been carrying a balance on his credit card, he had not received disclosure statements for several months.

After an investigation, it was found that, for approximately 10 months, the bank had failed to provide the client with monthly statements, in accordance with the Regulations.

Subsection 12(5) of the Regulations stipulates that a bank which issues credit cards must provide borrowers with supplementary disclosure statements on a regular periodic basis − at least once a month − containing an itemized statement of the account that describes each transaction and discloses each amount credited or charged, including interest charges, and the dates when those amounts were posted to the account. 

Compliance measure(s) taken

A Letter of Reprimand^{Footnote 1}  was issued, noting one violation against the bank.

Compliance considerations

It was noted that the suppression of monthly statements was the result of the failure of one bank employee to follow internal procedures and was an isolated incident.

The consumer, in this case, had made numerous attempts to get the situation corrected by contacting the bank to find out why he was no longer receiving monthly statements.

Corrective measures taken by financial institution

• When the bank discovered that a “statement hold” message had been incorrectly put on the client’s profile, it referred the consumer to the appropriate division of the bank. Staff in this section removed the message and mailed back copies of the customer’s statements.
• The bank also reviewed its internal procedures with the employee who had mistakenly entered the “statement-hold” message and reinforced the importance of processing changes to a customer’s account accurately, to ensure that statements are mailed to customers, as required.

Outcomes

The receipt of monthly credit card statements enables borrowers to reconcile their accounts and provides them with basic information such as the payment due date, the payments made, the charges on their accounts and the interest rate charged. By receiving statements in a timely manner, clients can avoid paying additional interest and/or service charges. In this case, the consumer’s account was delinquent to the extent that he was blocked from charging additional items on his credit card. The consumer did not feel comfortable paying the amount owed until he knew the full amount and details of what was owed.