Canada Govt Unveils New Rules Governing Bank-Complaint Arbiters

        By Paul Vieira 

    OTTAWA--The Canadian government said Wednesday it has released new rules governing third-party agencies that handle consumer complaints against federally regulated banks.

    The new rules won't compel banks to use a specific third-party agency, such as the independent Ombudsman for Banking Services and Investments, or OBSI, which is based in Toronto. Banks can use any arbitration service so long as it meets specific criteria established by the Canadian government and enforced by the Financial Consumer Agency of Canada.

    The new measures include tougher standards governing independence and accountability; a requirement to publicly report complaints received and ensuing probes; and a requirement to resolve complaints within 120 days, as opposed to the previous 180-day time period.

    The Financial Consumer Agency of Canada, another government body, will act as a supervisor over bank arbiters to ensure they abide by the new rules, which come into effect in September.

    The proposed regulations "bring needed transparency and rigor to the complaint-handling process, so Canadians can expect faster, more effective recourse when issues arise and at no cost to them," Finance Minister Jim Flaherty said in a statement.

    OBSI resolves disputes among participating banking and investment firms and their customers, and can recommended awards of up to 350,000 Canadian dollars ($344,386).

    In 2012, OBSI completed 640 investigations into consumer complaints against financial firms.

    Canada's two biggest banks, Royal Bank of Canada (RY) and Toronto-Dominion Bank (TD), have opted out of using OBSI, and use ADR Chambers Canada.

    Write to Paul Vieira at