Commissioner's Decision #124

Commissioner's Reasons for Decision

(Bank Act, subsection 459.2(2) and Notice of Branch Closure (Banks) Regulations, section 9)

In August 2014, I required the bank, pursuant to subsection 459.2(2) of the Bank Act ("Act") and in accordance with section 9 of the Notice of Branch Closure (Banks) Regulations ("Regulations"), to convene and hold a meeting between representatives of the bank, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing of the branch.

Applicable legislation

Subsection 459.2(2) of the Act states:

  • After notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner shall, in prescribed situations, require the bank to convene and hold a meeting between representatives of the bank, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities, including, but not limited to, alternative service delivery by the bank and measures to help the branch's customers adjust to the closing or cessation of activities.

The relevant sections of the Regulations state: 4.(1) The notice must be given to the Commissioner in writing no later than

  • (a) four months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in
  • (i) an urban area, or
  • (ii) a rural area where there is a retail deposit-taking branch within a travelling distance of 10 km from the branch; or
  • (b) six months before the date proposed for the closure of the branch or the cessation of the activity, if the branch is in a rural area where there is no retail deposit-taking branch within a travelling distance of 10 km from the branch.

9. For the purpose of subsection 459.2(2) of the Act, the following circumstances are prescribed as circumstances in which the Commissioner shall require a member bank to convene and hold a meeting referred to in that subsection:

  • (a) the member bank has not consulted the community in the area affected by the closure of the branch or the cessation of the activity well enough to ascertain the views of interested persons in the community with regard to the closure of the branch, the cessation of the activity, alternate service delivery by the bank or measures to help the branch's customers adjust to closing or cessation;
  • (b) an individual or a community representative from the area affected by the closure of the branch or the cessation of the activity submits to the Commissioner a written request for the meeting; and
  • (c) the request is not frivolous or vexatious

Facts

The bank has decided to close its branch located in a rural centre effective December 2014. The nearest branch (the "receiving branch") is located approximately 28 km from the closing location.

The Financial Consumer Agency of Canada (FCAC) received 10 requests from members of the affected community requesting that the Commissioner require the bank to hold a public meeting to discuss the proposed branch closure. No evidence exists that the requests are frivolous or vexatious.

FCAC also received 55 complaints from customers. The main concerns raised by the complainants were as follows:

  • the bank did not undertake a consultation to gauge the community's views prior to posting the closure notice;
  • accessing another branch or the branch of another financial institution requires a mode of transportation that is expensive and time-consuming, or must be done via electronic banking;
  • the community depends on the branch as the only financial institution in the area for their day-to-day banking needs.

Position of the bank

In the notice to customers attached to the letter that the bank sent to the Commissioner of the FCAC dated May 2014, the bank stated that the decision to close the branch was made for business reasons. The bank informed FCAC it has taken the following measures with the community in order to discuss the closure and alternative service delivery:

  • closure notices were mailed to all impacted customers in May 2014;
  • a public notice was posted at the branch in June 2014;
  • a public notice was posted in the local newspaper in July 2014;
  • letters were sent to community representatives, including the MP, MPP and mayor, in May 2014.
The bank also informed FCAC that it has taken the following measures in order to help consumers adjust to the branch closure:
  • all customers' accounts would remain active;
  • customers would receive the full range of services at any other branch;
  • there is no impact on cheque orders;
  • hours of operation for the receiving branch are longer, and the receiving branch offers a wider range of banking services.

The bank believes that it provided adequate notice of the closure to the Commissioner, consumers and the general public in compliance with the Regulations.

Considerations

In order for me to require the bank to convene and hold a meeting, the three criteria set out in section 9 of the Regulations (above) must be met.

With respect to the first criterion, a review of the information pertinent to this file suggests that additional consultation is necessary to address concerns of individuals in the community.

In regard to the second criterion, an individual or community representative affected by the closure submitted a written request to the Commissioner to convene and hold a meeting.

Lastly, no evidence exists that the meeting requests were frivolous or vexatious.

Therefore, it is my view that the bank did not consult the community affected by the closure of the branch well enough to ascertain the views of interested persons in the community with regard to the closure of the branch, alternate service delivery by the bank or measures to help the branch's customers adjust to the closing. Moreover, the requests received by FCAC from the consumers affected by the closure of the branch were determined not to be frivolous. Accordingly, I have required the bank to convene and hold a meeting in the community for the proposed branch closure.

Decision

The request to call a public meeting, pursuant to subsection 459.2(2) of the Bank Act, has been granted.

Ottawa, August 1, 2014.

Lucie M.A. Tedesco
Commissioner

Financial Consumer Agency of Canada