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Feb 16 2012

OBSI’s Update

OBSI’s recent newsletter provides an update on governance reform, the investment suitability complaints methodology and the stuck cases.

Governance – OBSI will be undertaking broad-based reform of its governance structure as was recommended in the report by the independent third party reviewer, The Navigator Company of Australia. OBSI will be conducting an external search for a new independent Chair and has established a Search Committee of the Board to provide oversight of the process.  The distinction between industry and independent directors embedded in OBSI’s bylaws will be eliminated and a new director nomination and selection policy will be developed. A new Governance Committee of the Board has been created to oversee the transition, develop new governance policies and procedures and consult with stakeholders.

Investment Suitability and Loss Assessment Methodology – OBSI will be publicly issuing proposed refinements to its investment suitability and loss assessment methodology for a 60-day comment period. OBSI will participate in information sessions organized by IIROC and the MFDA to discuss and obtain feedback on its approach to investment suitability complaints and its loss assessment methodology. The sessions will provide an opportunity for participatory discussion about how OBSI applies its specific methods to calculate investor losses in various fact scenarios.

Stuck Cases – To deal with the stuck cases (cases where a firm has not agreed to compensate the investor despite the passage of a considerable amount of time since OBSI’s issuance of a recommendation), OBSI’s Board has directed management to develop a temporary independent review process that meets the criteria identified by the regulators (CSA, IIROC and the MFDA) in their letter of October 21, 2011. Details of this process will be made public. It advises that after the October 21 letter was made public, a number of stuck cases have been resolved.

OBSI’s Consumer and Investor Advisory Council disagreed with the idea of a third party review of the stuck cases. Its position can be found at here.

Ellen Roseman has written in her blog that the federal government should step in and show leadership by ensuring that the banks and investment dealers cannot defect from OBSI and refuse to resolve the complaints that are at an impasse. FAIR Canada commented: “Would you rather have your banking or investment complaint reviewed by someone hired by the bank or by an independent ombudsman? Only one of these is fair to Canadians and it is not the option preferred by some banks. This should be an easy call for Finance Minister Flaherty…”.