Banking on Customer Experience: Bill C-86 and a Return to Service

Aug 28, 2021 | Customer Experience

Last year, the Government of Canada introduced sweeping changes that will transform how banks and their customers interact. New regulations guiding conduct, transparency, and disclosure will shift both how banks do business and what customers will come to expect from their financial institutions.

Of course, changes to the Bank Act and the Financial Consumer Agency of Canada Act broach a host of compliance issues. They also bring up more critical questions about ensuring integrity. Whether you are part of a branch team, a CEO, an executive, or a board member, how can you get a firm handle on customer experience throughout your financial institution? And how can technology help?

Bill C-86 and the Bank Act Shake Up

Banks are no strangers to big bills, but this one may be the heftiest we’ll see in our lifetimes. Bill C-86 – which received Royal Ascent on December 13, 2018 – brings major amendments to the Bank Act and changes to Canada’s banking industry.  Salient here to our concern with customer experience, Division 10 of Part 4 “implements enhancements in the areas of corporate governance, responsible business conduct, disclosure and transparency, and redress” (House of Commons, 2018).

The Bill provides an abundance of strict new guidelines, including ones that mitigate the provision of false information, restrict the application of pressure, clamp down on inappropriate sales, and encourage consent and clarity in all customer transactions. It also creates a whistleblowing framework which allows bank employees to report wrongdoings confidentially and without fear of dismissal, suspension, demotion, or harassment.

“The FCAC will have a new capacity to monitor customer complaints and ensure compliance”

Bill C-86 amends the Financial Consumer Agency of Canada Act to strengthen the mandate of the Financial Consumer Agency of Canada (FCAC) and grant it additional powers. The FCAC supervises all federally-regulated financial entities and reports to Parliament through the Minister of Finance. It already puts financial consumer protection policies in action and will have a new capacity to monitor customer complaints and ensure compliance.

Complaints, Committees & Compliance

Under the new regulations and the FCAC’s modernized Supervision Framework, each Canadian bank is required to establish a new committee, external to its board, which will report annually to the FCAC on activities related to consumer protection. The committee will also review internal procedures established to comply with consumer provisions and ensure their management follows consumer protection policies and properly reports complaints.

In tandem, under this Framework, financial institutions must proactively identify, address, and monitor their market conduct risk and report how they measure up. Within 60 days of each quarter’s end, they must recount each complaint received. Records must be submitted to the FCAC in excruciating detail including: how the complaint was received, the complaint details or transcript, the name and contact information of complainant, the date of the complaint, the nature of the complaint and related product or service, the date of resolution, the actions taken, the compensation offered, the satisfaction of resolution, and so on.

“At the end of each financial year, banks must detail customer complaints on their websites.”  

Banks must now also make this information available to the public. At the end of each financial year, they must detail customer complaints on their websites and provide a written report to anyone who requests it. This information will include the number and nature of complaints, the length of time it took to deal with the complaint, how many were resolved to the satisfaction of the customer, and related details.

Impetus for C-86 and Issues of Oversight

These changes to the Bank Act aim to shift corporate banking culture from a focus on sales to a renewed focus on service. Sections on customer protection, described above, emerged in part from two reports created by the FCAC: the 2018 Domestic Bank Retail Sales Practices Review and the 2017 Report on Best Practices in Financial Consumer Protection.

The FCAC’s research found that, in many cases, the dubious practices that increased customer risk transpired without the full knowledge of the CEOs, executives, and board members.  How did this happen?

“Information that is currently gathered and reported on in isolation must be pulled together in a way that provides [financial institutions] with a comprehensive and holistic assessment of their market conduct risk.”

In a speech to the Economic Club of Canada last spring, FCAC Commissioner Lucie Tedesco shared her enlightened take on the FCAC’s Review. She noted that those running Canada’s banks are not getting a full picture of their own institutions because the “roles, responsibilities and accountabilities related to the oversight and management of sales practices … are not always well defined” (FCAC, 2018).

According to Tedesco, at its core, this is an issue of data and signals a need for insights generated from across the institution. She stated that “information that is currently gathered and reported on in isolation must be pulled together in a way that provides them with a comprehensive and holistic assessment of their market conduct risk” (FCAC, 2018).

“Banks need the tools that reach across divides within their institution, and ones that extend to conversations outside as well.”

If amassed and analysed properly, data sitting in silos within institutions may offer a holistic picture and drive strategic decision-making. Banks need tools that reach across divides within their institution, and ones that extend to conversations outside as well. While branch managers may not always be forthcoming about practices, for example, customers will reveal how your bank is performing if you will listen. Tuning into the voice of the customer will help financial institutions understand what’s happening. It also makes business sense.

Financial Rationale for Tuning In

While customers are historically committed to their banks, this may be changing. Different generations have different priorities. Accenture’s North America Consumer Banking Survey found that “18% of Millennials switched their primary bank within the past 12 months — compared to 10% of customers 35 to 54 and 3% of people 55 and older” (Accenture, 2015). Banks need to pay increased attention to the needs of customers, not only because the Canadian government now regulates it, but because customers are changing and have different expectations. Customers are talking. Are you listening?

“18% of Millennials switched their primary bank within the past 12 months.”

Need more encouragement to tune into customers? By shifting to a service model, not only will banks have fewer customer complaints to report on their websites (as outlined above), but also they are more likely to avoid forthcoming modes of public discrediting. As part of the new regulations, the FCAC Commissioner will publicize violations, including the name of the offender and the amount of the penalty imposed. Penalties? That’s right. Bill C-86 increases financial penalties for non-compliance. The maximum penalty for Bank Act violations has jumped from $500,000 to $10M for financial institutions and from $50,000 to $1M for individuals (FCAC Supervision Framework, 2018).

“The maximum penalty for Bank Act violations has jumped from $500,000 to $10M for financial institutions.”

Supporting a Shift to Service

Shifting from a sales to a service model is the way forward for Canada’s banks. Not only is the approach now rooted in Canadian law, but that law makes non-compliance expensive and very public. Many financial institutions need support to make the transition. Yes, they need help to manage the new reporting. But even more so, they need help to listen to their customers and tune into the conversations happening in their own institutions. Again, according to Tedesco, it is only then that financial institutions will know if they are truly virtuous – “that is, truly committed at the core and heart of its culture to customer centricity” (FCAC, 2018).

“Only by listening to conversations happening in their own institutions will financial institutions know if they are truly virtuous.”

Financial institutions need new tools to help focus this transition and must consider how technology can assist in the collection, organization, and analysis of data, including customer feedback. Not only will this help comply with the Government’s new regulatory framework, but also, listening to the voice of the customer will benefit banks in other ways. By fully leveraging customer behaviour and feedback, analytics tools will help banks make continual improvements to customer experience through the customer journey, increase transparency, retain customers, and improve the bottom line.

Semeon is an AI-powered analytics tool that collects raw data – from a range of sources and formats – rapidly classifies the information along different parameters, and provides interpretation of its meaning. Its speed and precision means that organizations can create detailed reports very quickly, better understand their own operations and culture, and tune into the voice of the customer to remedy their pain points.

Want to see what Semeon can do for your institution?  Get in touch for a free trial.

Check out the link below to learn more about our platform. Or give us a call at 1800-630-6000.

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