Your Bank and Your Rights
Most people don’t spend a lot of time thinking about their bank. However, under Canadian law, you have several rights when you are dealing with a federally regulated financial institution, such as a bank. This means that, if a bank violates your rights, you can contact the Financial Consumer Agency of Canada to discuss your situation.
It’s important to note that, while some credit unions are federally regulated, most credit unions are provincially regulated and thus different legislation applies.
So, what are your rights when dealing with a bank?
Opening an Account
When you open an account with a Canadian financial institution, you must be provided with certain information about your account in writing. This information can be provided to you electronically if you agree to receive it this way.
The information you must receive when opening an account includes:
- A copy of the account agreement
- Information on all charges and fees associated with the account
- Information on how you will be notified if there are any changes to your account or the fees associated with using your account
- Details on the bank’s compliant-handling processes
This information must be provided right away when you open an account in person. If you open a bank account by phone, the bank has 14 days to send you a copy of the account agreement.
Account Fees and Charges
As mentioned, when you open an account, the financial institution must provide you with information on the fees associated with your account.
If the financial institution changes its fees or introduces a new fee, this information must be clearly communicated to all account holders at least 30 days before the change or additional fee goes into affect.
The bank must communicate these changes to account holders by:
- Sending written communication detailing the changes. This information may be sent electronically if you have agreed to receive electronic information from your bank.
- The institution must also display this information:
- In each of its branches
- On its website
- On all of its ABMs (Automated Banking Machines)
- The information listed in these locations must be posted at least 60 days before the changes come into affect
A bank may place a hold on a cheque that is cashed. However, the bank is required by law to limit the hold period for consumers and small and medium businesses as long as:
- The cheque is in Canadian dollars
- It is undamaged and readable
- It is paper-based and drawn from a financial institution’s Canadian branch
- It contains special numeric characters across the bottom of the cheque encoded with magnetic ink
In most cases, cheques for $1500 or less can only be held for up to five business days while cheques over $1500 can be held for eight business days. This is to make sure that the cheque is drawn from a valid account and that a stop payment order has not been placed on the cheque.
In addition, except for in certain situations, the bank must make the first $100 of the funds deposited available for withdrawal immediately if the cheque is deposited in person, or on the next business day if it has been deposited in an Automated Banking Machine.
Canadian government cheques can be cashed for free at any bank, even one where you are not a customer, as long as the cheque is for less than $1500 and you show acceptable identification. You can cash Canadian government cheques no matter how old they are.
If a financial institution decides to close a branch, it must provide notice at least four months in advance of doing so. Six months’ notice is required if the bank is located in a rural area and there is no other deposit-taking branch of the financial institution within 10 kilometres.
Filing a Complaint
All federally regulated banks are required to have a complaint-handling process in place. The Financial Consumer Agency of Canada must have a copy of this process.
When you make a complaint to a bank, you must be provided with information on the bank’s internal complaints procedures as well as the information that you need to meet the requirements of those procedures.
If you have tried to resolve your complaint directly with the manager or customer service representative of your bank and were unsuccessful, the next step is to speak with a senior staff member or internal ombudservice. If your complaint is still not resolved to your satisfaction, you can have it reviewed by a third-party. Contact the Federal Consumer Agency of Canada for more information.