Mandatory reporting for external complaints body

Guides

1. Introduction

The Financial Consumer Agency of Canada (FCAC) supervises the external complaints body (ECB) to ensure it complies with its legislative and regulatory obligations (collectively, “market conduct obligations”) that are overseen by FCAC.

As stipulated in section 5.3 of FCAC’s Supervision Framework, the ECB must file specific information with FCAC within timeframes and formats prescribed by statute. This information includes advising the Commissioner in writing if the ECB has determined that a complaint raises a potential systemic issue, and submitting an annual report to the Commissioner on the discharge of the ECB’s functions and performance of its activities, all of which are reviewed to ensure compliance. Failure to meet statutory filing requirements may lead to enforcement action.

FCAC expects institutions to designate a compliance liaison to interact with the Agency and ensure filing requirements are met. The compliance liaison is a senior official serving as the regulated entity’s main point of contact responsible for communicating and liaising with FCAC on the regulated entity’s market conduct obligations.

FCAC requires that the ECB submit additional information, in accordance with FCAC’s mandate, including aggregate complaint reports and reportable compliance issues. As required to fulfill its supervisory activities, FCAC will request from the ECB other information not addressed in this guide.

2. Purpose

This guide provides details about specific information that the ECB must file with FCAC. This guide complements FCAC’s Supervision Framework, published in April 2017 and in effect as of October 1, 2018. However, it is not intended as a substitute to the laws and regulations monitored by FCAC. When in doubt, please refer to the laws and regulations applicable to your type of organization:

• Learn more about the laws and regulations that govern your organization

Before applying for approval, a body corporate must have policies and procedures in place, along with terms of reference to govern its functions and activities as an external complaints body that meet legal requirements. These obligations remain conditions for the ECB to maintain its approved status.

This guide covers the information that the organization must file with FCAC’s Commissioner related to the following topics:

• reportable complaints
• annual report to the Commissioner on the discharge of its functions and performance of its activities
• reportable compliance issues
• potential systemic bank issues
• investigations report
• non-compliance with a final recommendation

3. FCAC’s use of mandatory reporting information

FCAC uses the information provided to monitor the ECB’s compliance with its market conduct obligations and determine appropriate promotion, supervision and/or enforcement actions.

The data received serves additional functions, including but not limited to:

• promoting the adoption by the ECB of policies and procedures in line with its market conduct obligations
• enhancing FCAC’s ability to supervise the ECB, assess market conduct risk and manage relationships
• prompting the ECB to gather key details that will aid in its own internal investigations as it relates to compliance issues and to analyzing the root causes of potential breaches
• triggering improvements to the ECB’s control frameworks, which can lead to stronger compliance programs and reduce the likelihood of recurring breaches
• assisting FCAC in monitoring and evaluating trends and emerging issues that may have an impact on financial consumers and merchants
• identifying issues common to the industry and that require further guidance for the ECB, in the form of FCAC guidance and compliance bulletins^{Footnote 1} 
• identifying opportunities for policy discussions and collaboration with other government agencies, regulators and stakeholders to foster a better understanding of financial services and related issues

4. Aggregate complaints report

A reportable complaint is a complaint against the ECB that involves a market conduct obligation.

FCAC reviews aggregate complaints from the ECB. That said, the ECB must record the findings of its investigation of every consumer complaint related to a market conduct obligation. Relevant legislation^{Footnote 2}  does permit FCAC to request detailed information on individual complaints.

Required use of aggregate complaints report template

The ECB must report complaints received by or forwarded to its “reportable level” and do so using the template in Annex A: Reportable complaints aggregate report. The "reportable level" is typically considered to be the ECB’s compliance liaison with FCAC. The compliance liaison is FCAC’s primary contact related to market conduct obligations. The individual’s title may vary, based on the ECB’s operational structure.

The reportable complaints aggregate report contains a section for “nil” reporting to be used as applicable.

A reportable complaint must be forwarded to FCAC even though:

• the complainant has also contacted FCAC
• the complainant is satisfied with the outcome of the complaint
• the complaint was received at a reportable level and was resolved directly
• the ECB concluded that it had complied with its obligations to complainants

For more information on the complaints that must be reported to FCAC, please refer to the following document:

• External complaints body reportable complaints aggregate report guide

    Deadlines to report complaints

The deadlines to file aggregate complaints reports are as follows:

• For the period from April 1 to June 30, the deadline is August 29
• For the period from July 1 to September 30, the deadline is November 29
• For the period from October 1 to December 31, the deadline is March 1
• For the period from January 1 to March 31, the deadline is May 30

5. Annual report to FCAC’s Commissioner

According to relevant regulations^{Footnote 3} , the ECB must file an annual report with the FCAC Commissioner on the discharge of its functions and performance of its activities, which includes, but is not limited to:

• a summary of the results of any consultation with its members and with persons who have made complaints to it
• in respect of each of its members, the number of complaints that it received, the number of complaints that it determined were within its terms of reference, the number of final recommendations that it made and the number of complaints that, in its opinion, were resolved to the satisfaction of the persons who made them, and
• the average length of time taken to deal with complaints

Annual reports are to be submitted within 135 days after October 31 of each year.

The ECB must make the annual report available to the public without delay after it is submitted to the Commissioner.

6. Reportable compliance issues

According to section 5 of FCAC’s Supervision Framework, the ECB must submit reportable compliance issues to FCAC.

Definition

A reportable compliance issue must meet the following three criteria:

Criterion 1: The issue must be a breach^{Footnote 4}  of a market conduct obligation.

Criterion 2: The issue would normally be reported to the ECB’s compliance liaison.

Criterion 3: The issue meets, at a minimum, one of the following:

• once detected by the ECB, it took longer than 30 calendar days to fix the issue
• the issue affected more than one complainant; or
• the issue was ongoing for more than 6 months before the ECB detected it

The compliance issue may have been identified through various means including, but not limited to:

• internal audits
• compliance or control reviews
• process review
• a system change/enhancement
• a complaint
• If a compliance issue has already been reported to FCAC through the normal reporting of a reportable complaint, it should still be reported as a reportable compliance issue and linked to the initial report.
• A reportable compliance issue must be reported to FCAC even though the issue was caused by an individual employee.

Reportable compliance issue template to be used

• Compliance issues must be reported to FCAC using the following form:
• Reportable compliance issues summary report - external complaints body (PDF, 827 KB), for compliance issues involving the ECB.

Deadline to file reportable compliance issues

• The ECB must submit any reportable compliance issue within 60 days of the compliance issue being reported to their compliance liaison.

7. Potential systemic bank issues

According to relevant regulations^{Footnote 5} , the ECB must report any potential systemic issue discovered during its (complaint) investigations relating to its members. FCAC defines a potential systemic issue as a compliance issue that may:

• impact multiple consumers, or
• have market-wide implications

Generally, potential issues may not be isolated in nature and often stem from more widespread procedural or documentation issues.

Potential systemic bank issue template

Potential systemic bank issues must be reported to FCAC using the following form:

Reportable compliance issues summary report – potential systemic bank issues reported by the external complaints body (PDF, 826 KB)

Deadline to file potential systemic issues

The ECB must file any potential systemic issue, as defined above, to the FCAC within 30 days after the day on which the ECB determines that a complaint raises a potential systems issue.

8. Investigations report

According to relevant regulations (627.49(i.1) of the Bank Act), the ECB must provide information to the FCAC on all investigations completed throughout the quarter.

Deadline to submit investigations reports

The ECB is required to submit its investigations report on a quarterly basis, within 60 days after the end of each quarter.

The deadlines to file investigations reports are as follows:

• For the period from April 1 to June 30, the deadline is August 29
• For the period from July 1 to September 30, the deadline is November 29
• For the period from October 1 to December 31, the deadline is March 1
• For the period from January 1 to March 31, the deadline is May 30

9. Non-compliance with a final recommendation

According to relevant regulations (627.49(h.1) of the Bank Act), the ECB must, without delay, inform the Commissioner in writing of cases in which an institution does not comply with a final recommendation.

10. Contact FCAC

If you have any questions related to your obligations as the ECB, please contact FCAC at compliance@fcac.gc.ca or the lead supervisor assigned to the ECB. All required reporting should be sent to this email address in accordance with the deadlines stated above.