CG-14 Branch closure guidance – Pre-closure consultation process
The new Financial Consumer Protection Framework (FCPF) in the Bank Act and the Financial Consumer Protection Framework Regulations (collectively: “FCPF Requirements”) come into force on June 30, 2022. The FCPF Requirements apply to banks, authorized foreign banks and federal credit unions. This guideline will be reviewed, including for purposes of reflecting the FCPF Requirements, and will be reissued in due course as is appropriate. Starting June 30, 2022, this guideline is to be read by banks, authorized foreign banks and federal credit unions in conjunction with, and subject to, the FCPF Requirements. If there is any inconsistency between the FCPF Requirements and this guideline relating to banks, authorized foreign banks and federal credit unions and their conduct post June 30, 2022, the FCPF Requirements prevail.
Publication date: January 19, 2016
Effective date: January 19, 2016
The objective of the Notice of Branch Closure Regulations (the Regulations) is to ensure that consumers are informed and sufficiently consulted by the financial institution before their branch closes. Therefore, the purpose of this Commissioner’s Guidance is to assist financial institutions in developing adequate internal policies and procedures to deal with the branch closure notification requirements. 1
The Regulations provide that the Commissioner shall require the financial institution to convene and hold a meeting under certain conditions.
The purpose of such meeting is to allow the affected community and financial institution to exchange views on the branch closure, when the financial institution has not consulted the members of the community affected by the closure well enough to ascertain their views.
According to section 9 of the Regulations and subject to certain exceptions, the Commissioner shall require a meeting, if all of the following circumstances apply:
- (a) The financial institution 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 the closing or cessation;
- (b) An individual or 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 a meeting; and
- (c) The request is not frivolous or vexatious.
The Commissioner has compelled the holding of a number of meetings in recent years, as a result of financial institutions not sufficiently consulting with communities affected by their respective branch closures. It has been observed that, while these meetings allow affected community members the opportunity to voice their concerns, they are, more often than not, a source of frustration for those in attendance, who perhaps hope for a different outcome.
FCAC recognizes that the decision to close a branch by a financial institution is a business decision. Nonetheless, it is essential financial institutions have a good understanding of the impact their decisions will likely have on consumers and their communities. FCAC believes an important step in this process is to afford consumers the opportunity of discussing branch closures with their financial institution, so that impact mitigation strategies can be explored as early as possible after the financial institution has provided formal notice of the branch closure. Equally as important is financial institutions’ understanding of the criteria that will be applied by the Commissioner to determine whether adequate consultation with the community has taken place.
The purpose of a community consultation is:
- to ensure effective communication; and
- to allow affected community members represented primarily by the financial institution’s clients, to:
- express their views and discuss their concerns with respect to the branch closure with the financial institution
- inquire about and explore potential alternative banking arrangements and services.
- Consulting the community and the financial institution’s clients:
- ensures that the community has been consulted well enough to ascertain the views of its members as required by the Regulations
- provides the financial institution with the opportunity to share key factors on which its decision was based, including consideration of alternatives, if any
- allows consumers to make alternative banking arrangements in a timelier manner
- potentially alleviates some of the frustrations and anxieties experienced by consumers by allowing them to share their views and ask questions.
- For a consultation process to be effective, it should be:
- advertised—the consultation is public and open to all interested parties
- timely—the consultation is done well in advance of the purported closure date and at a time that suit the community 2
- accessible—the consultation is open to all consumers, community members and interested parties, in a known or familiar meeting location in the vicinity of the closing branch (e.g. in-branch, community halls, town halls, legion halls)
- honest—the consultation is conducted in a manner that is open, transparent and focused on soliciting consumer views and addressing their needs and concerns
- facilitated—facilitators should keep the discussion on track. They should also be able to communicate in the language(s) of the affected community.
- Examples of acceptable consultation measures may include one or more of the following, depending on the circumstances:
- a community meeting (see CG-11 Branch closure meeting rules) held well in advance and which includes consumers, local businesses and local politicians
- in-branch information sessions
- pro-active client-calling programs and other outreach programs by the closing branch
- a dedicated toll-free phone number available to consumers if they wish to contact the financial institution with their questions
- one-on-one meetings between consumers and branch staff, branch managers or regional managers
- web-based consultations (e.g. e-consultations, Internet surveys) which reach a broader group of consumers
- consultation with public bodies that may be seeking similar feedback from consumers (e.g. chamber of commerce).
- Best practices:
In addition to proactively consulting the community prior to a branch closure, financial institutions are encouraged to incorporate the following best practices into their decision-making process:
- engaging and actually involving the community well in advance of the scheduled date for closure
- enabling groups with limited resources and living in isolated areas to attend meetings by arranging transportation and ensuring accessibility or by reaching out to them through other means
- targeting outreach efforts to those who are more severely impacted (e.g. seniors, those with low incomes, those on benefits) by the closure
- coaching front-line staff to proactively communicate with and provide guidance to consumers
- knowing the audience—ensuring the consultation is appropriate for the members of the affected community (e.g. a financial institution should not hold Web consultation meetings in communities where high-speed Internet—or web connection are unavailable)
- ensuring the consultation process is fully integrated into the financial institution’s policies and procedures.
Every consultation process should focus on openness, transparency and accountability. While FCAC strongly encourages financial institutions to hold branch closure community meetings or information sessions well in advance, the appropriate consulting mechanism should be determined on a case by case basis.
That being said, FCAC expects financial institutions to always adequately consult affected communities to ascertain the views of their members. Financial institutions will be expected to demonstrate how they have applied the current guidelines and what reasonable steps they have taken to address the concerns of the consumers. In the event that this cannot be demonstrated by the financial institution, the Commissioner may require that a meeting be held.
Financial institutions are responsible for ensuring full compliance with the legislative and regulatory requirements pertaining to branch closures and will have 90 days from the date of this guidance to incorporate the required amendments into their operating procedures.
FCAC Administrative change
Going forward, when the Commissioner requires a financial institution to convene and hold a branch closure meeting, FCAC will publish a consumer advisory message on its website detailing the Commissioner’s request. The purpose of the message will be to assist financial institutions in disclosing the details (date, time and place) of their meetings to their members and to ensure that all interested and affected consumers be aware of the meeting. 3
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