Understanding Quebec’s New Complaint Handling Regulation in the Financial Sector

Understanding Quebec’s New Complaint Handling Regulation in the Financial Sector

Effective July 1^st, 2025, the Regulation respecting complaint processing and dispute resolution in the financial sector (the Regulation) will set forth standardized procedures for handling complaints for Entities (as defined below). This initiative of the Autorité des marchés financiers (the AMF) marks a significant regulatory stride towards unifying complaint resolution practices across the sector. This bulletin examines the Regulation’s scope and outlines its newly mandated procedures for complaint handling.

Fast Facts

• The Regulation takes effect July 1, 2025.
• The Regulation applies to financial institutions, financial intermediaries and credit assessment agents operating in Québec (the Entities).
• The Regulation mandates standardized procedures for processing complaints.
• Entities must adhere to requirements for clear communication, timely responses and thorough documentation of complaints.
• Non-compliance with the Regulation may result in penalties ranging from $1,000 to $5,000.

Who Does it Concern?

The Regulation applies to:

• Financial institutions, including:
  • insurers authorized under the Insurers Act;
  • financial services cooperatives within the meaning of the Act respecting financial services cooperatives;
  • deposit institutions authorized under the Deposit Institutions and Deposit Protection Act;
  • trust companies authorized under the Trust Companies and Savings Companies Act.
• Financial intermediaries, namely:
  • persons and partnerships registered as firms, independent partnerships or independent representatives under the Act respecting the distribution of financial products and services;
  • persons registered as dealers or advisers under the Derivatives Act or the Securities Act.
• Credit assessment agents designated under the Credit Assessment Agents Act.

Investment dealers and mutual fund dealers that are members of the Canadian Investment Regulatory Organization (CIRO) are exempt from the application of the Regulation for their activities in Québec as an investment dealer or mutual fund dealer, provided that they adhere to comparable rules established by CIRO and approved by the AMF. However, they must comply with the Regulation while engaging in any other activities they are authorized to conduct under a different registration.

What is Considered a Complaint?

With respect to financial institutions and financial intermediaries, a complaint means any reproach or dissatisfaction regarding a service or product offered by such institutions or intermediaries where the reproach or dissatisfaction is communicated by a person who is a member of its clientele and a final response is expected. A final response is expected when the complainant’s communication explicitly or implicitly implies that action must be taken to address the complaint.

Regarding credit assessment agents, a complaint means any reproach or dissatisfaction concerning a practice of a credit assessment agent where the reproach or dissatisfaction is communicated by any other person concerned on whom the agent holds a record.

The following are not considered complaints under the Regulation:

• a request made for information or materials in respect of an offered product or service;
• a request for access or rectification made in accordance with the Act respecting the protection of personal information in the private sector;
• a claim for an indemnity or any other insurance claim;
• a request for correction of a clerical error or mistake in calculation, unless further action must be taken to address the consequences of the error or mistake for:
  • the person making the request;
  • in the case of a financial institution or financial intermediary, any other person who is a member of its clientele;
  • in the case of a credit assessment agent, any other person concerned on whom the agent holds a record;
• communication of a comment or feedback.

What Does the Regulation Provide For?

1) Financial Intermediaries Will Have to Adopt or Adjust Their Complaint Processing and Dispute Resolution Policy to Respect New Guidelines

When the Regulation comes into force, financial intermediaries must have a policy in place that:

• Details how complaints are received, assigned, analyzed and responded to, ensuring that the processing be kept simple and free of charge for the complainant, and be conducted in an objective manner that considers the complainant’s interests;
• Specifies measures for implementing the policy across the organization, including appointing a complaints officer with appropriate authority and competence;
• Ensures complainants are properly assisted throughout the process, including timely updates on the status of their complaint;
• Defines measures for assigning complaints to staff under the supervision of the complaints officer and ensures staff have access to essential information at any time;
• Requires periodic reporting to the financial intermediary’s officers on various elements: number and causes of complaints, outcomes of complaints, policy implementation issues and issues identified when ascertaining the causes common to the complaints; and
• Aims to develop a comprehensive understanding of received complaints to identify common causes and address raised issues effectively.

These requirements apply in addition to those already set out under the Securities Act and the Act respecting the distribution of financial products and services regarding complaint processing and dispute resolution policies. They do not apply to financial institutions and credit assessment agents, who are already subject to similar guidelines under their respective sectoral statutes.

2) Financial Institutions, Financial Intermediaries and Credit Assessment Agents Will Have to Follow New Complaint Processing Rules and Practices

The Regulation establishes comprehensive guidelines for Entities. The new complaint processing rules and practices include the following key points:

a) Disclosure Requirements

Entities are required to draft any disclosure document using clear, readable, specific and non-misleading language regarding complaint processing and dispute resolution. Disclosure documents must emphasize essential information for informed decision-making and to prevent confusion or misunderstanding among the clientele. The Regulation specifically prohibits Entities from using, in any representation or communication intended for the public that refers to their complaint processing department, the term ombudsman, or any other qualifier of the same nature that suggests that such persons are not acting on their behalf.

b) Clear Communication and Assistance

Entities must take the necessary actions to understand what is being communicated to them and, in doing so, when necessary, must provide assistance to the originators of such communications in filing their complaints. They must also ensure that staff use clear and plain language in any interactions with complainants.

If an Entity identifies that a complaint involves multiple institutions, intermediaries, or agents, it must inform the complainant. This notification should clarify the extent to which other Entities are involved and inform the complainant of their right to file a complaint regarding those other parties. The Entity should also provide any relevant information it holds that would enable the complainant to communicate with those other parties, if available. In addition, when a complaint may have repercussions on other persons who are part of its clientele, the Entity must take the necessary actions to remedy the situation.

c) Standardized Processing of Complaints

Entities must handle received complaints diligently. Specifically, this involves:

• Promptly sending an acknowledgment of receipt to the complainant in the manner specified in section 22 of the Regulation;
  • The acknowledgment of receipt must be sent in written form and, in addition to informing the complainant of its right to request to have the complaint record examined by the AMF (or, if applicable, a federation), include the following: (1) the complaint record identification code; (2) the date on which the complaint was received by the Entity, if different than the date on which the complaint was registered; (3) the means by which the complainant may obtain information about the processing of the complaint; (4) the expected timeframe for processing the complaint and the date before which the final response must be provided to the complainant; and (5) a hypertext link providing access to the summary of the complaint processing and dispute resolution policy, or a copy of such summary.
• Documenting the complaint properly and maintaining a complaint record in compliance with section 18 of the Regulation;
  • The complaint record is comprised of: (1) the complaint; (2) a copy of the acknowledgement of receipt… sent to the complainant; (3) any document or information used in analyzing the complaint; (4) if applicable, a copy of any document or information sent or provided to the complainant; (5) if applicable, a copy of the written notice sent to the complainant; (6) a copy of the final response provided to the complainant; and (7) any exchanges, or a summary of the exchanges, with the complainant. The complaint record should be kept for the same retention period as for any information relating to the complainant.
• Entering complaints into a register and keeping it updated; and
• Providing the complainant with a final response no later than the 60^th day after receiving the complaint.
  • The final response must include: (1) a statement to the effect that it is a final response; (2) a summary of the complaint received; (3) the conclusion of the analysis, including the reasons for the conclusion, and the outcome of the complaint process; (4) a statement of the complainant’s right to request to have the complaint record examined by the AMF or, if applicable, by a federation, as well as an explanation of how to make such a request; (5) if an offer to resolve the complaint is presented to the complainant, the timeframe within which the complainant may accept the offer; and (6) the business contact information and signature of the person who processed the complaint.

Entities must also continue managing exchanges with complainants even after providing a final response, allowing for new facts and questions, until no other actions are required concerning the complaint.

d) Resolution Offers

Entities must allow complainants a reasonable amount of time to consider and respond to any offer made to resolve a complaint. This period should enable the complainant to seek advice if needed to make an informed decision. Upon acceptance of an offer, the institution must implement it within 30 days, unless an alternative timeframe is agreed upon with the complainant, based on the complainant’s interests.

Additionally, Entities are prohibited from imposing certain conditions when presenting a resolution offer. For example, they cannot:

• Prevent the complainant from requesting an examination of the complaint record by the AMF or, when applicable, a federation;
• Require withdrawal of other complaints filed by the complainant; or
• Restrict the complainant’s communication with regulatory bodies like the AMF, recognized self-regulatory organizations respecting the regulation of the financial sector, the Chambre de la sécurité financière or the Chambre de l’assurance de dommages.

e) Accelerated Processing of Certain Complaints

Complaints that can be resolved to the complainant’s satisfaction within 20 days can be subject to an expedited handling. Under this procedure, the Entities may provide the conclusion of their analysis either verbally or in writing and, if applicable, a settlement offer. A summary of this information may then be documented in the complaint record.

However, if a complaint cannot be resolved to the complainant’s satisfaction within 20 days, the Entity must send a written acknowledgment of receipt by the 20^th day following receipt of the complaint. The standard complaint processing guidelines must then be followed.

f) Summary of Policy

Entities must have a summary of their complaint processing and dispute resolution policy on hand, which shall:

• Describe the procedure for filing a complaint and the complainant’s right to obtain assistance in filing the complaint;
• Detail the steps involved in handling complaints;
• State that a complaint can be validly filed using the form from the AMF’s website, together with a link to the form;
• Specify how to obtain information regarding complaint processing;
• State the specified complaint processing time as per the Regulation, as well as the conditions and reasons for extended complaint processing times, if applicable; and
• Inform the complainants of their right to request examination of the complaint record by the AMF or, if applicable, a federation, with instructions on how to do so.

When posted on an Entity’s website, the summary must be easily accessible to clients or, in the case of a credit assessment agent, by any other person concerned on whom the agent holds a record.

3) Complainants Will Have the Right to Have Their Complaint Record Sent to the AMF for Examination

Entities must send the complaint record to the AMF within 15 days of a complainant’s request. They must also provide contact details of their designated responder to the AMF within 10 days, upon request.

4) Non-Compliance Will Be Sanctioned by Penalties Ranging from $1,000 to $5,000

The Regulation provides monetary administrative penalties of $1,000 to $5,000 for non-compliance, applicable to financial institutions and credit assessment agents only. Financial intermediaries, on the other hand, are overseen by the Financial Markets Administrative Tribunal, which will have the power to impose appropriate penalties for breaches, expected to be similar to those set out in the Regulation.

Conclusion

By enforcing clear timelines, ensuring comprehensive documentation and promoting effective communication, the Regulation aims to bolster consumer confidence and trust in financial services. We encourage Entities that are subject to the AMF’s supervision to revisit their complaint handling policies before the Regulation takes effect on July 1^st, 2025. For more information or assistance, please contact our team.

By Jennie Baek, Tania Boulanger, and Jade Cassivi

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2024