Branch closure guidance – pre-closure consultation process

Invitation for comments

We invite all interested parties to submit their comments by September 28, 2015. We encourage interested parties to send comments by email to compliance@fcac.gc.ca. We will also accept written comments by mail or fax.

Please send written comments to:

Consultations
Compliance Promotion and Supervision
Financial Consumer Agency of Canada
427 Laurier Avenue West, 6^th floor
Ottawa, ON K1R 1B9
Fax: 613-941-1436 

We will not​ publish any individual submissions received. By submitting responses to this consultation, you consent that part of your response may become public and may be posted on the Financial Consumer Agency of Canada’s (FCAC) website. Where necessary, comments submitted may be revised to remove sensitive information. FCAC may wish to quote from or summarize comments in its public documents and post all or part of them on its website. Please indicate clearly if you would like FCAC to withhold all or part of your comments from its public documents.

Persons making comments should be aware that once they are received by FCAC, all comments will be subject to the Access to Information Act and may be disclosed in accordance with its provisions. 

Background

When a financial institution plans to close a branch, it must, by law, provide at least four months’ notice to its customers to minimize any inconvenience and to provide them with enough time to find other service options.

Under federal legislation, the Commissioner of FCAC shall require the financial institution to hold a meeting to discuss the closure, exchange views, discuss alternate service delivery and measures to help customers adjust to the closure if the Commissioner is of the opinion that the financial institution has failed to adequately consult the community about the closure or cessation of activities.

Therefore, the Notice of Branch Closure Regulations’ purpose is to ensure that consumers are informed in a timely manner and sufficiently consulted by financial institutions when branches are closing.

This proposed Branch Closure Guidance – pre-closure consultation process has been drafted to accompany the existing Regulations, the already published CG-11 Branch Closure Meeting Rules and to assist financial institutions in developing adequate internal policies and procedures for dealing with the branch closure notification requirements.

The Guidance proposes key features of an effective consultation process as well as acceptable consultation measures that FCAC’s Commissioner would consider appropriate when deciding whether to require the financial institution to convene and hold a meeting.

Proposed Guidance

CG-14 Branch closure guidance – pre-closure consultation process

Effective date: July 2, 2015

Purpose

The objective of the Notice of Branch Closure Regulations is to ensure that consumers are informed in a timely manner 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.

Background

The Notice of Branch Closure Regulations (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.

Requirement

According to sectio​​n 9 of the Regulations and subject to certain exceptions, the Commissioner shall require a meeting, if all of the following circumstances apply:

• (a) Th​e fi​nancial 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 indivi​dual 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.
• (c) The reque​st is not frivolous or vexatious.

Iss​ue

The Commi​ssioner 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.

Ana​lysis

FCAC recogniz​es that the decision to close a branch by a financial institution is a business decision. Nonetheless, it is essential that 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, and whenever feasible, prior to formal notice being given so that impact mitigation strategies can be explored as early as possible in the process. 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. 

Guide​lines

The purpose of consulting the community:

• to provide an opportunity for affected community members to express their views and discuss their concerns with respect to the branch closure with the financial institution
• to provide an opportunity for affected community members to inquire about and explore potential alternative banking arrangements and services.

I. The benefits of consulting the community:

• ensures that that community has been consulted well enough to ascertain the views of its members per the regulatory requirement
• provides the financial institution with the opportunity to share the analysis on which its decision was based, including consideration of alternatives, if any
• allows consumers to make alternative banking arrangements in a timelier manner
• allows consumers to share their views and ask questions regarding the closure, thereby perhaps alleviating frustration and anxiety.

II. The key features of an effective consultation process:

• advertised: the consultation process is made 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
• accessible: the consultation is open to all consumers, community members and interested parties, in known or familiar meeting locations (e.g. community halls, town halls, legion halls)
• honest: the consultation focuses on consumers’ needs and concerns
• facilitated: the consultation is conducted in a manner that is open, transparent and focused on soliciting consumer views; facilitators should also be able to communicate in the language(s) of the affected community.

III. 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 to discuss the closure by inviting consumers, local businesses and local politicians
• in-branch information sessions
• a pro-active client calling program and other outreach programs by the closing branch
• a dedicated toll-free phone number for consumers to contact the financial institution to discuss closure and alternative banking arrangements
• one-on-one meetings between customers and branch staff, branch manager or regional manager
• web-based consultations (e.g. e-consultations, Internet surveys) that help the financial institution reach a broader group of consumers
• consultation with relevant public bodies that may be seeking the same type of feedback from consumers (e.g. chamber of commerce).

IV. 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 the decision-making process:

• engaging with the community well ahead of the closure and actively involving it
• 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 by 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.
  

Guidance

Every consultation process should have a focus of openness, transparency and accountability. While FCAC strongly encourages financial institutions to hold branch closure community meetings or information sessions in a timely manner, the appropriate consulting mechanism for each branch closure should be determined on a case-by-case basis.

That being said, FCAC expects financial institutions, at all times, to adequately consult affected communities to ascertain the views of their members with respect to the closure. Financial institutions will be expected to demonstrate that they have considered the current guidelines and taken significant measures to address the concerns of the consumers of the closing branch. A meeting may be required by the Commissioner if the financial institution cannot demonstrate that it has taken appropriate steps to consult the community. 

Next steps 

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 making sure all interested persons affected by the financial institution’s decision are aware of the meeting.