COALITION CALLS FOR INDEPENDENT BANKING OMBUDSMAN
Monday, September 15, 1997
TORONTO - Today, the Canadian Community Reinvestment Coalition (CCRC)
released its position paper on the Canadian banking ombudsman system, and
called for the creation of an independent banking ombudsman.
The CCRCís position paper, the first it has released, sets out detailed
evidence of the significant flaws with the current system, and a series
of recommendations for correcting these flaws based on much more fair systems
in other jurisdictions.
"The Canadian banking ombudsmen are all selected, paid and directed
by the banks, and they have no power to overrule a bank's decision even
if it is clearly wrong," said Duff Conacher, Chairperson of the CCRC,
"The system is unfair and biased toward the banks."
The position paper reviews the British and Australian banking ombudsman
systems, which are more fair to consumers because the ombudsmen are independent
and can make binding rulings. A 1994 House of Commons Industry Committee
report recommended that the government establish a banking ombudsman based
on the British model.
The position paper set out the following recommendations for correcting
the flaws in the current Canadian ombudsman system:
- Accept the recommendation of the Industry Committee report and establish
an independent banking ombudsman based on the British model. ē Require
all Schedule I banks to contribute to the financing of the ombudsman.
- Give Schedule II banks the option of participating in the the ombudsman
- If the current World Trade Organization agreement negotiations lead
to opening Canada to foreign banks, adjust the ombudsman system to ensure
that those banks are covered.
- Once the independent ombudsman has been established, require all Schedule
I banks to enclose a flyer in mailouts to their customers informing them
of the ombudsman system.
"Canadians deserve a fair, efficient, and impartial ombudsman system
that has the power to resolve complaints about banking service," said
Summaries of Consumer Banking Complaints (September
The Canadian Community Reinvestment Coalition (CCRC) has received complaints
from bank consumers from across Canada over the past nine (9) months. Although
we are not claiming that all of these complainants are correct in their
complaint, we do believe that they have a right to a simple, inexpensive
and efficient complaints process, including a fair hearing and an impartial
ruling. The current Canadian banking ombudsman system does not provide
any of these essential elements of an effective alternative dispute resolution
Below are set out summaries of 20 of the complaints we have received
from people across Canada. Only their initials are provided because they
have not yet decided whether to go public with their complaints. If the
Canadian banking ombudsman system is working so well, why have all these
people contacted the CCRC and are having such problems with the banks and
the complaint-handling system?
- Mr. G. G., Toronto, Ontario - customer notified that bank branch is
shutting down; customer requests that bank ombudsman examine and report
on reasons for shutdown, including the financial viability of the branch;
ombudsman refuses to examine complaint.
- Mr. K. S., Toronto, Ontario - bank called business loan last year even
though all interest payments had been made and business had existed for
over 30 years; had to sell part of business to pay off loan; found new
financing with another bank, which then called the loan last spring, even
though business had $100 million in export contracts.
- Mr. and Mrs. R., Victoria, B.C. - bank representative told her that
they would not charge two penalties for early payment of mortgage; after
payment bank charged both penalties; bank denies that they made promise
to charge only one penalty, and says nothing can be done; couple has lost
more than $5,000, their only savings.
- Ms. D. G., Calgary, Alberta - bank clears cheque for deposit in customerís
account of large amount (>$100,000) without checking whether it is certified
as requested by the customer; bank then gives customer a bank draft of
almost same amount to purchase land; deposited cheque bounces and as a
result so does the customerís cheque; customer loses $10,000 deposit on
land purchase, loses opportunity to purchase land, and is charged for overdraft
by the bank; bank denies it made a mistake.
- Mr. D. B., Vancouver, B.C. - customer wants to open simple chequing
account; finds out requirements at various banks; two banks have reduced
requirements for identification as promised last February, but now require
a credit check and that at least $100 be kept in account for first six
- Mr. G. G., Vancouver, B.C. - customer has been with bank for 20 years;
three years ago he qualified for seniors program (no service charges);
bank never notified him and he just found out six months ago about the
program; bank will only refund past six months of service charges.
- Ms. A. S., Toronto, Ontario - bank says it advanced her husband substantial
sums; she says the funds were never advanced; for four years the bank has
refused to provide a full accounting, including a paper record, proving
that the funds were advanced; the bankís ombudsman refuses to deal with
- Mr. D. I., Rural Ontario - customer is an executor of an estate attempting
to find out information about bank stock held by the estate; bank refuses
to give any information, or to provide letter stating that it will not
give the information.
- Ms. A. M., Toronto, Ontario - customer has a small business loan problem
with the bank; has been stuck in the ombudsman process for months; delay
is crippling her business.
- Mr. A. G., Toronto, Ontario - bank charges interest on credit card
balance even though customer paid the balance by the due date; bank refuses
to refund interest charged.
- Mr. B. D., Vancouver, B.C. - has found out that bank had not notified
or advised his elderly mother that it may be better for her to switch accounts
in order to earn more interest on her savings in a very inactive account;
very little interest paid on account over past five years and he feels
his mother has been taken advantage of because of her age.
- Mr. G. B., Rural Ontario - customer has had ongoing problem for almost
10 years based on bank calling farm credit loan without any substantive
reason; customerís credit rating ruined as a result of bankís actions.
- Ms. P. H., Edmonton, Alberta - bank deposited money that was not hers
into her account; she used some of the money by mistake; the bank charged
her for an overdraft.
- Mr. S. G., Toronto, Ontario - has had an ongoing problem with bankís
calculations concerning his mortgage payments.
- Ms. A. A., Toronto, Ontario - has an ongoing problem with the bank
concerning her business loans; bank has charged her with fraud and she
is disputing the claim.
- Mr. P. C., Rural Ontario - has a substantial problem with the bank
concerning terms of loan that has continued for four years.
- Mr. G. A., Rural Quebec - has a substantial problem with the bank concerning
business loan that has continued for 10 years.
- Mr. M. L., Montreal, Quebec - involved in business loan situation that
may lead to litigation with two banks.
- Ms. C. O., Rural Ontario - works in construction industry; has been
caught in several separate "bank horror stories" over past ten
- Ms. M. J., Calgary, Alberta - has a problem with a bank concerning her
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