Complaining about a business loan in Canada: your lender, OBSI and other routes

To complain about a business loan in Canada, start with the lender's own complaint process and get its final position in writing. For a federally regulated bank, you can then take the complaint to the Ombudsman for Banking Services and Investments (OBSI), which since 1 November 2024 is the single external complaints body for all federally regulated banks and accepts complaints from small businesses at no charge. OBSI can recommend compensation of up to $350,000 per complaint, but it does not review a lender's general pricing, fee scales or its interest rate and risk management policies. Credit unions and caisses have provincial routes, and some lenders, such as online and cash advance providers, have no ombudsman at all.

This guide is part of business loan mistakes to avoid. It is general information, not legal advice.

Which route applies to your lender

Check your loan documents or the lender's website: they must tell you how to complain and which external body applies.

What OBSI can and cannot do

Can:

• Investigate complaints from individuals and small businesses about OBSI participating firms, free of charge.
• Look at errors, unclear or inaccurate information, failure to follow the agreement or the firm's own procedures, and unfair treatment.
• Recommend compensation for losses, up to $350,000 per complaint.

Cannot:

• Force the firm to follow its recommendation. Recommendations are not binding, but OBSI can publicly name a firm that refuses.
• Review a firm's general pricing, its standard scale of fees, or its interest rate and risk management policies. A complaint that "the bank should have lent to me" or "the rate was too high" is unlikely to get far; a complaint about how your particular file was handled may.
• Take a complaint that is already before a court.

For a bank, you can go to OBSI once the bank has had 56 calendar days to deal with your complaint without giving a final response, or after you receive its final response. You then generally have 180 calendar days from the final response to bring the complaint to OBSI. Check the current rules on obsi.ca before you file.

What makes a strong complaint

Typical complaints that can succeed:

• The lender charged a fee or rate that the commitment letter did not provide for.
• A prepayment penalty was calculated differently from the agreement.
• The lender gave clearly wrong information that you relied on, for example about program eligibility or the release of a guarantee.
• A payment was misapplied, or the lender failed to release security after repayment.
• The lender did not follow its own complaint or notice procedures.

Complaints that usually fail:

• "The bank should have approved my loan."
• "The rate was too high," where the rate matched what you signed.
• Disagreement with a demand where the agreement allows it.

Building the file: a checklist

• The commitment letter, loan agreement, guarantee and any amendments.
• Statements showing the fees, interest or penalty you dispute.
• Your own calculation of what should have been charged, with the arithmetic.
• Emails, letters and notes of calls with names and dates.
• A clear statement of what you want: a refund, a correction, release of security.
• The lender's final response letter, or proof that you asked for one.

Keep the complaint short and factual. One page of facts, one page of numbers and copies of documents is more effective than a long narrative.

A worked example (illustrative)

A corporation repays a $120,000 fixed-rate loan early. Its agreement says the prepayment charge is three months' interest. At 8%, that is $120,000 x 8% / 4 = $2,400. The bank charges $4,150, calculated as an interest rate differential, which the agreement does not mention. The owner:

1. Writes to the branch with the clause and the calculation, asking for a refund of $1,750.
2. Escalates to the bank's complaints office when the branch refuses, and asks for a final response.
3. Files with OBSI after the final response, attaching the agreement, payout statement and calculation.

Regulators and where they fit

• The Financial Consumer Agency of Canada (FCAC) supervises how federally regulated banks comply with their obligations, including complaint handling, but does not resolve individual disputes.
• OSFI supervises banks' safety and soundness, not complaints.
• Provincial regulators supervise credit unions and, in Quebec, the AMF supervises Desjardins and other institutions.
• If you think a loan breached the criminal interest rate, get legal advice; complaint bodies do not enforce the Criminal Code.

For problems with a default or demand, see covenant breach and default. For a list of official bodies, see official sources.

Frequently asked questions

Does it cost anything to use OBSI?

No. OBSI is funded by its participating firms.

What if my claim is larger than $350,000?

OBSI can recommend no more than its limit. For larger losses, consider legal advice and the courts.

Can I complain about a CSBFP loan to the government?

ISED does not handle disputes between borrowers and lenders. Complain to the lender, then to its external complaints body.

Do I need a lawyer to complain?

No, but a lawyer helps if the amounts are large, a guarantee is involved or the lender is enforcing security.

Sources

• Ombudsman for Banking Services and Investments — eligibility, time limits and how to file
• Financial Consumer Agency of Canada — banks' complaint-handling obligations
• Autorité des marchés financiers — complaints about Quebec financial institutions
• Financial Services Regulatory Authority of Ontario — Ontario credit unions
• BC Financial Services Authority — British Columbia credit unions
• BDC — BDC's complaint process