CG-2 Access to Basic Banking Services Regulations: Refusal to open an account

From: Financial Consumer Agency of Canada


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.

Effective date: July 2007


The Access to Basic Banking Services Regulations provide a statutory obligation for banks to open retail deposit accounts for consumers. Section 3 of the Regulations sets out the exceptions to the legal obligation to open accounts. Those exceptions include what is considered reasonable and what is in the public interest, and recognize the need for banks to limit their risk when dealing with certain types of past behaviour by individuals.


The Financial Consumer Agency of Canada (FCAC) recently encountered cases where banks had refused to open accounts for consumers. Paragraph 3(1)(a) of the Regulations was cited as the provision upon which the refusals were based. The fact that the consumers in question had outstanding debts, or had issued cheques with non-sufficient funds (NSF cheques) from an account they held previously with that bank, was considered as “reasonable grounds” — by the institution — for believing that the account would be used for illegal or fraudulent purposes.

At issue, here, is the application of paragraph 3(1)(a) of the Regulations; specifically, what constitutes reasonable grounds to believe that individuals who wish to open a retail deposit account intend to use it for illegal or fraudulent purposes.


The Acting Commissioner’s interpretation of the Regulations is that neither an outstanding debt on an account, which a consumer owes the bank, nor the fact that the consumer previously issued NSF cheques constitute “reasonable grounds,” as specified by paragraph 3(1)(a) of the Regulations. As such, neither is a valid reason for the financial institution to refuse to open an account for a consumer.

Certain types of behaviour in operating an account do not necessarily constitute illegal or fraudulent behaviour, as outlined in the Regulations. For example, a liability resulting from an NSF cheque is not proof that a person is engaging in illegal or fraudulent activity. The fact that someone owes a bank money does not mean that that person is necessarily involved in illegal or fraudulent activity.

Banks have a choice when dealing with existing customers who do not respect the rights assigned to their account. If a bank wishes to limit the risk to the institution, it can place reasonable constraints on the rights of the account-holder, such as placing a hold on cheques deposited, revoking overdraft privileges, withdrawing chequing privileges, and limiting or revoking debit card privileges. With respect to new accounts, as an alternative to refusing an account to customers, banks have a right to determine the type of account that they will offer — based on appropriate criteria — and the type of constraints they will put on that customer’s account. Moreover, by allowing a former customer to open a new account, the bank would be in a position to recover previous amount owing from deposits made to the new account.


In the cases he reviewed, the Acting Commissioner chose not to exercise his discretion to issue a Notice of Violation. However, he advised that, in his view, a previous debt owing does not automatically equate to potential for fraud or illegal behaviour and indicated a need to adjust account-opening policies to reflect this view.

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: