Review of Case Process for Consumer Provision Complaints

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Observations, Assessment and Recommendations 

Table: Observations, Assessment and Recommendations
Framework
Criteria 		Elements/
Components 		Observations & Assessment Recommendations

Operating environment
  1. Responsibilities and the accountability and reporting structure are defined.

  2. Staff competencies, including required formal and informal training necessary to maintain knowledge levels, are defined.
  1. An organizational chart for the Compliance and Enforcement Branch (CEB) exists. There are 10 FTEs in the branch, including the Director.

  2. Policy and procedures have been developed which specify the key responsibilities for each CEB position. Responsibilities for staff at the Consumer Contact Centre CCC) are outlined in the MOU between FCAC and CDIC.

  3. Job descriptions and competency profiles exist for all CEB staff positions. Competency profiles are based on OSFI's Competency Dictionary.

  4. A 5-day orientation program is provided to new CEB staff, which includes training on FCAC, relevant legislation / regulations, and internal case processes. New CCC staff receive training on FCAC, relevant legislation / regulations, WebCIMS, and the information to be obtained from callers.

  5. Learning plans are prepared as part of the annual performance appraisal process. Training opportunities are identified through discussion between management and staff. Training can be work related or developmental in nature.

  6. According to the Director CEB, FCAC allocates between 3-5% of salaries for training. In the 2005-06 fiscal year, CEB training expenses were $24,181. Eight of the 10 CEB staff took training in fiscal year 2005-06.

  7. CEB management indicated in interviews that CEB staff are knowledgeable and professional in their interactions.

  8. CEB management are aware of the potential for retention challenges, as many CEB staff have been with the organization since its inception. Staff retention has been identified as an issue in FCAC's strategic plan.

 
Framework
Criteria 		Elements/
Components 		Observations & Assessment Recommendations

Objective Setting
  1. The objectives of the case process for consumer provision complaints are:

    • defined, including the risk tolerance;

    • aligned with FCAC corporate objectives; and

    • understood by CEB staff.
  1. The Compliance Framework document describes FCAC's supervisory model, which was established in consultation with stakeholder groups including the Department of Finance, the financial industry, and consumer groups. According to the document, FCAC's supervisory model uses a hybrid of oversight tools and incorporates some elements of risk-based supervision for the oversight of consumer regulations. The document provides a high-level description of the supervisory model used by FCAC, including a description of the case process for consumer provision complaints.

  2. The case process for consumer provision complaints is but one aspect of the overall compliance program. Other compliance activities include industry reviews, annual examinations, and special projects such as mystery shopping. All compliance activities are delivered by the CEB.

  3. The objectives of the case process for consumer provision complaints and their alignment to FCAC corporate objectives / mandate are described in FCAC's Program and Performance Management Evaluation Report, available on its website, and in the Introduction section of the FCAC Powers and Enforcement Manual, which is available to CEB staff.

  4. In interviews, CEB staff and the Director CEB were able to articulate FCAC's mandate and how this mandate is delivered through the case process for consumer provision complaints.

 
Framework
Criteria 		Elements/
Components 		Observations & Assessment Recommendations

Risk management
  1. Potential risks or events that may impact the achievement of objectives are:

    • identified;

    • assessed in accordance with FCAC's ERM framework; and

    • mitigated where control gaps exist.
  1. CEB management have identified key risks related to the case process for consumer provision complaints and have implemented processes to manage and monitor these risks.

  2. The Acting Commissioner identified the three key risks as: risk of cases 'falling between the cracks' during processing; risk of not escalating issues when needed (communication risk); and risk of loss of confidence in the system. These risks are consistent with those identified and assessed during FCAC's ERM exercise.

  3. Mitigating actions designed to manage these risks include bi-weekly case status reports and statistics, four types of biweekly meetings (CEB staff, Compliance operations with the Deputy Commissioner, Compliance update with the Commissioner, and FCAC-wide management meetings), and the use of a fair and due process in investigating and deciding on consumer provision complaint cases. The Senior Legal Counsel provided input and direction on the structuring of roles and responsibilities to respect due process, and reviewed the case processing policy and procedures for consumer provision complaints.

  4. Recent changes in senior management roles and responsibilities have emphasized the need to closely manage the risk of loss of confidence in the system. After the Commissioner's 5-year term ended on October 31, 2006, the Deputy Commissioner was appointed as the interim Commissioner for a 90-day period. CEB management are sensitive to the need to preserve the separation of the investigative role (Deputy Commissioner and CEB staff) and the decision making role (Commissioner), in order to avoid conflicts of interest and to ensure due process. An Acting Deputy Commissioner was appointed to assist in maintaining this separation for new and existing consumer provision complaint cases.

 
Framework
Criteria 		Elements/
Components 		Observations & Assessment Recommendations

Process and Control Activities
  1. The case process for consumer provision complaints is clearly defined with controls that are aligned to identified risks, and includes:

    • policies / criteria where necessary;

    • appropriate level of analysis, application of judgement and documentation;

    • the updating of FCAC guidance as required; .. service standards and transparency in case processing;

    • authorities, escalation and sign-off requirements for case disposition; and

    • reporting requirements within and outside of CEB.
  1. "Chapter 2: Case Processing Policy and Procedures for Consumer Provision complaints", revised March 30, 2006, outlines the procedures to be followed in processing consumer provision complaints. Based on a review of the Compliance Framework, the "Chapter 2" policy and procedures, and discussions with the Senior Compliance Officer (SCO), a map of the case process for consumer provision complaints and a narrative walkthrough were prepared A&CS.

  2. The "Chapter 2" policy and procedures document also includes guidance for closing cases at the staff level. Guidance and work tools (e.g., templates) are available to assist CEB staff in case evaluation, investigations, report writing and application of judgement when processing cases. A team approach is encouraged among CEB staff in order to leverage past experience with similar compliance issues and to obtain a second opinion in the application of judgement. Where existing guidance does not address the compliance issue at hand, it is escalated to CEB management (and the Commissioner, if appropriate) for review and determination of next steps. The new guidance is then disseminated to CEB staff via team meetings and Records of Decision from management meetings.

  3. Internal service standards have been developed and have been embedded in the "Assignment actions" function of WebCIMS. The Acting Commissioner indicated that further enhancements to WebCIMS are planned in the future, to assist in identifying the location of any delays or bottlenecks in case processing.

  4. A flow of information occurs between CEB and Federally Regulated Financial Institutions (FRFIs) at several stages in the case process. FCAC also sends semi- annual compliance statistics at the aggregate (industry) and individual levels to FIs.

  5. Each Compliance Officer (CO) is assigned to one of the "big 7" FIs. Cases involving the other FIs are assigned on an ad hoc basis, depending on workload, expertise and area of interest. Interviews revealed that CEB staff and management feel that the level of resources is adequate to meet the work volumes. To accommodate the unpredictable fluctuation in caseloads, COs were recently assigned to 2-person teams, for purposes of case overflow management and designated back-up arrangements. Before the current Director CEB was hired, the SCO and the Deputy Commissioner shared the duties of the Director CEB position.

  6. Back-up arrangements exist for all CEB positions except the SCO. The absence of a designated back-up for the SCO could result in delays in addressing significant cases and projects, reduced ability to access guidance on complex compliance issues, and a less efficient use of management resources (e.g., Director CEB, Deputy Commissioner).

  7. The Case Evaluation Form (CEF), introduced in April 2005, provides a formal means of evaluating consumer provision complaint cases to determine the manner in which cases will be processed. It is used to allocate CEB resources based on risk and benefits to Canadians.

    Cases would be escalated for investigation if certain conditions were met, or if a threshold score of 70 or higher (out of 145) was calculated. According to the Acting Commissioner, this threshold has resulted in approximately 10% to 15% of total cases being closed without investigation.

    The threshold score was recently revisited and CEB management confirmed that it is still appropriate. A second form is currently being piloted to evaluate cases with systemic compliance issues. The Acting Commissioner estimates that the implementation of the second form will increase the percentage of total cases closed without investigation to approximately 20%.

  8. Issue escalation is performed using the previously mentioned CEF, as well as in CEB team meetings. CEB staff prepare bi-weekly updates on the status of all cases in process, which provides a further opportunity to identify and refer cases for the next level of review. A memo system is currently used to forward cases to the Commissioner's office for consideration / decision. CEB plans to replace this memo system with a routing sheet that will capture sign-offs by the Director CEB, Deputy Commissioner (and the Commissioner) in a single document.

  9. Sign-off requirements for correspondence and Compliance Reports are identified in internal policy and procedures. A standardized form is used by CEB staff to sign-off on closure of the case file. This is an administrative step, based on appropriate sign-offs which occurred earlier in the case process. Information on the standardized form is used to update the WebCIMS data fields.

  10. The case status reports prepared by COs are reviewed by CEB management in bi- weekly operational meetings. In alternate weeks, update meetings are held with the Commissioner. Internal discussions have been held regarding the feasibility of using WebCIMS to populate the case status reports, as these are currently prepared manually by each CO and summarized by the SCO. The Director CEB would like to use WebCIMS to manage and process cases from start to finish.

  11. The Director CEB is responsible for liaising with Public Affairs and Consumer Education (PACE) Branch in instances where the Commissioner decides to publicize a case. The Compliance Framework document provides an overview of the process involved.

  12. Based on the process map prepared by A&CS, key activities in the case process for consumer provision complaints were identified (e.g., decision points; review / approval steps). A total of 10 key attributes were developed, reflecting the life cycle of a case. A sample of 12 consumer provision complaint case files was selected for attribute testing.

  13. The attribute testing of sample cases revealed the following error: one instance was noted where the WebCIMS "Resolution" data field did not reflect the "Withdrawn" status of the case. A subsequent review of the case population revealed that this situation existed for all cases disposed of as "Withdrawn" (22 cases in total).

    CEB management advised that the current version of WebCIMS does not have "Withdrawn" in the drop-down options list for the "Resolution" data field. The "Resolution" field is thus left blank. CEB management advised that the process for producing compliance statistics has taken this into account.

    This issue has been included in the list of improvements to be made to WebCIMS. FCAC expects a resolution to this issue by June 2007.

  14. No other errors with regards to the key attributes were noted.

  15. The review of sample case files also resulted in the following observations that are not directly related to the key attributes, but are important in relation to the case process for consumer provision complaints:

    • Approvals by CEB management were not dated in all cases: the absence of review/approval dates makes it difficult to determine whether the service standards associated with various steps in the case process for consumer provision complaints have been met;

    • Evidence of review by CEB management was not on file for the draft Notice of Decision and Reasons for Decision: without supporting documentation on file, CEB management will not be able to demonstrate that these documents were reviewed by the appropriate authorities before being forwarded to the Commissioner;

    • Cases with similar issues are not sufficiently cross-referenced: Cases with similar issues are identified and discussed at CEB meetings. Although minutes of meetings are kept, the file numbers of cases with similar issues are not centrally maintained for easy reference and update (e.g. a list of cases with similar issues). Cross-referencing is important where cases involve an issue(s) that has been or will be referred to CEB management or the Commissioner for consideration of next steps. Cross-referencing assists in ensuring that, once next steps are identified, all cases with this issue(s) will be actioned and disposed of in a consistent manner.

    • No listing of the contents of the Commissioner's file ("C" file) is maintained: the "C" file contains copies of relevant documents from the main investigative file, plus any new documents prepared by CEB staff or provided by FIs for the Commissioner's consideration. After the 30-day appeal period expires, the new documents are transferred into the main investigative file and the "C" file is destroyed. In the absence of a listing of the contents of the "C" file, one is not able to identify the information / documentation provided to the Commissioner for his consideration, once the 30-day appeal period has passed.

  1. Make arrangements to ensure appropriate back- up/coverage of the Senior Compliance Officer's responsibilities.

  2. Include approval dates as well as signatures on the routing sheet currently under development.It is suggested that a separate routing sheet be used for each letter and report, and retained in the case file.

  3. Enhance existing procedures to include centrally maintaining the file numbers of cases with similar issues, for cross-referencing purposes.

  4. Maintain a listing of the contents of the "C" file that was provided to the Commissioner for his consideration.
Framework
Criteria 		Elements/
Components 		Observations & Assessment Recommendations

Monitoring
and
Reporting
  1. Quality assurance activities are performed to monitor and report on:

    • adherence to the case process for consumer provision complaints;

    • complaints case activity (volume, complexity, etc.) to support planning; and

    • areas for process improvement.

  2. Appropriate management reporting practices to the Director CEB and others involved in the case process have been established.

  3. Appropriate reporting on the achievement of CEB objectives.
  1. The Compliance Analyst reviews all case files to verify that the information entered into WebCIMS is correct and that the case documentation is complete.

    • For those cases for which a CEF is completed: quality control activities are embedded in the case process via the reviews / approvals performed by CEB management and the Commissioner.

    • For those cases that were closed without a CEF being completed: these cases are not reviewed by CEB management. The Compliance Analyst reviews the disposition code for consistency of usage.

      Any concerns with the disposition code would be discussed with individual COs or at CEB staff meetings, as appropriate. The Compliance Analyst does not perform a "post mortem" review of these cases.

  2. However, quality assurance reviews of closed cases are not conducted. The absence of quality assurance reviews may hinder management's ability to assess the continuing appropriateness of prior positions taken with respect to compliance issues. Cases which are closed without being scored could be actioned inappropriately or in an inconsistent manner by CEB staff. Opportunities to enhance synergy with PACE could be missed, in that reviews of such cases could reveal opportunities for consumer education.

  3. All consumer provision complaint cases are entered into WebCIMS. A data query and reporting software (PowerPlay) is used to generate monthly reports on complaints case activity using data from WebCIMS. These monthly reports are reviewed and discussed during the CEB operational management meetings.

  4. CEB policy and procedures are reviewed on an annual basis. The SCO is responsible for updating internal policy and procedures to reflect any changes to the case process and new guidance / management positions on compliance issues.

  5. The Director CEB is involved in the case assignment process and also acts as the liaison to the Senior Legal Counsel for CEB staff requests for a legal opinion. In this way, Director CEB is kept informed of all new cases as well as any potential legal issues. The Director CEB participates in all CEB management meetings as well as agency-wide management meetings.

  6. The case status reports prepared by COs provide information on the total number of cases in process. Breakdowns include: cases by CO, cases opened, "late" cases (i.e., cases older than 4 months), significant cases, and cases to the Commissioner.

  7. CEB management indicated that they are generally satisfied with the case files and Compliance Reports forwarded to them for review / approval. The Senior Legal Counsel indicated that he is satisfied with the information provided by CEB staff in relation to requests for legal opinion.

  8. The FCAC Business Plan describes the CEB's key performance measures and their targets. These indicators are monitored using a scorecard, which FCAC plans to produce on a quarterly basis. The scorecard is produced using WebCIMS data. An annual assessment of FCAC's performance against the key indicators is conducted. The results are reported in FCAC's Program and Performance Management Evaluation Report.

5. Enhance quality assurance activities to include a periodic "post mortem" review of closed cases.
Framework
Criteria 		Elements/
Components 		Observations & Assessment Recommendations

Communications
  1. There is ongoing and transparent communication regarding the case process for consumer provision complaints within CEB and with management and other interested groups within and outside of FCAC.

  2. Corporate memory is captured, maintained and accessible as needed.
  1. The case process for consumer provision complaints includes ongoing communication within CEB and with management regarding current cases. The Compliance Analyst is the designated contact person for CCC staff for any compliance-related questions or comments. The CCC staff interviewed indicated that they are satisfied with the level of support / guidance provided by CEB.

  2. CEB also communicates on an ongoing basis with FIs. These communication activities are embedded throughout the case process for consumer provision complaints. For example, FIs must forward each reportable complaint to FCAC within 60 days of the receipt of the complaint at a reportable level. CEB staff request additional information from FIs, as appropriate, in evaluating and investigating cases. FIs are provided with a Statement of Facts for validation before the case is forwarded for the Commissioner's consideration. FIs also have an opportunity to submit representations to the Commissioner before a Decision is made.

  3. FIs also receive semi-annual aggregate (industry level) compliance statistics as well as individual compliance statistics. The statistics show the total number of cases received and provides a breakdown by case type and status. Comparative information for the most recent 12 month period is also provided.

  4. According to its 2005-06 Annual Report, FCAC collaborated on a research project with the Centre for Financial Services of Toronto's Seneca College. The project involved designing a curriculum and course materials to enhance educational opportunities for the staff of financial institutions and financial regulators. The resulting course materials will be suitable for training workers in the compliance area of the financial sector.

  5. FCAC disseminates regularly updated information about its compliance mandate on its website. The website also contains links to relevant legislation and regulations, and Commissioner's decisions (posted quarterly).

  6. A shared network drive, accessible to CEB staff, contains documents such as: legal opinions, WebCIMS compliance statistics, templates for letters and reports, previous FCAC positions taken with regards to specific compliance issues, minutes of staff and operational meetings, and Records of Decision from Compliance Update meetings.

  7. The main investigative paper file is the official record for each complaint case. The same file number is used on the paper file and in WebCIMS. WebCIMS is a case management system used to capture information on all consumer provision complaint cases for the purposes of internal monitoring and reporting as well as reporting to Parliament and the general public.

  8. To facilitate access to electronic documents, Foremost is an electronic archiving system which can be used to store FCAC letters sent to FIs as well as electronic documents provided by FIs. Interviews with CEB management and staff indicated that Foremost is not consistently used.

  9. CEB management indicated that they have undertaken an assessment of overall records management practices. For example, a common understanding is needed regarding the draft documents which should be retained in the paper case file.
 


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Date Modified:
2011-05-05