MEDIA RELEASE

COALITION CALLS FOR INDEPENDENT BANKING OMBUDSMAN

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 CCRC’s 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. • 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 system.
• 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 Conacher.

Summaries of Consumer Banking Complaints (September 1997)

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 process.

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 customer’s 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 customer’s 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 months.
• 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 bank’s ombudsman refuses to deal with the complaint.
• 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; customer’s credit rating ruined as a result of bank’s 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 bank’s 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 years.
• Ms. M. J., Calgary, Alberta - has a problem with a bank concerning her business loan.