Decision #38730-132Q404

File: 38730-132Q404

Commissioner’s Decision

Compliance issue

Accounts – Refusal to open a retail deposit account
Bank Act, s. 448.1(1)
Access to Basic Banking Services Regulations, ss. 3(1)(a)(b), 4

The Financial Consumer Agency of Canada (FCAC) received six complaints from consumers — within a period of approximately two months — indicating that various branches of the same bank had refused to open a retail deposit account for them because of prejudicial information about them on their credit file.

In the same period, FCAC also received a complaint reported by the bank, relating to another refusal by the bank to open an account, for similar reasons.

Subsection 448.1(1) of the Bank Act requires banks which are members of the Canada Deposit Insurance Corporation and which open retail deposit accounts through a natural person to open an account for consumers who meet the requirements set out in section 4 of the Regulations.

Subsection 3(1)(a) of the Regulations stipulate that a bank may refuse to open a retail deposit account if the bank has reasonable grounds to believe that the account will be used for illegal or fraudulent purposes.

Section 4 of the Regulations states that consumers can open a retail deposit account if they go to the bank in person and present acceptable identification.^{Footnote 1} 

Decision taken

A Letter of Reprimand^{Footnote 2} , noting seven violations against the bank.

Compliance considerations

In the present case, the Commissioner noted that prejudicial information, such as a poor credit rating on a consumer’s credit history, does not by itself constitute reasonable grounds to believe that the account will be used for illegal or fraudulent purposes; nor will it automatically result in a refusal to open an account.

The bank demonstrated diligence in its efforts to review its account-opening procedures before implementation of the Regulations and took immediate corrective action in response to the complaints. The bank has not received any similar complaints since the implementation of the new procedures.

Measures taken by financial institution

As a result of FCAC’s intervention, the bank:

• re-examined and enhanced the personal deposit account opening procedures;
• offered to open a retail account for the consumers who were previously refused an account.

Outcomes

The Government of Canada established the Access to Basic Services Banking Regulations because having a bank account is essential to the management of personal finances. Consumers who have access to a bank account are able to participate more effectively in the financial marketplace. As a result of the enforcement of the Regulations, the bank implemented new procedures for opening retail accounts and took measures to prevent any violation of the Regulations in the future.