The federal government is moving to streamline the process under which Canadians can file formal complaints about their banks, and setting up a new system of oversight for the industry.

In a series of proposed rules unveiled Friday, Finance Minister Jim Flaherty said the government is moving to help consumers resolve disputes in a more timely, impartial and transparent manner.

“Today’s sweeping new rules will give more power to consumers looking to resolve a dispute with their bank by creating a stronger, more independent consumer complaint system," Flaherty said.

Banks have long had to have dispute resolution procedures in place and to be members of external monitoring bodies. But the current system has no system-wide set of public standards, lets banks select what external complaints body they want to comply with — and indeed doesn't impose any binding obligation for banks to comply with their rulings.

Recently, the Royal Bank and TD Bank pulled out of membership with the Ombudsman for Banking Services and Investments and hired ADR Chambers to act as their dispute settlement service.

That has led to differences in procedures and uncertainty for consumers, the government says.

Under the proposed regulations, any dispute resolution body sanctioned by Ottawa to monitor the banking sector will have 120 days to come to a decision. That's down from the current industry standard of 180.

As well, those involved in the resolution of complaints by the body must be independent and banks will be required to inform consumers of the name and contact information of the external complaints body.

The bodies will come under the supervision of the Financial Consumer Agency of Canada.

Nothing in the rules, however, will make decisions by the complaint review services binding on the banks, and they will still have a choice of who will hear the cases.

With files from The Canadian Press