For years, FAIR Canada and a coalition of consumer advocates have called on provincial governments and securities regulators to give the Ombudsman for Banking Services and Investments (OBSI) binding authority. Six years ago, Ontario’s Capital Markets Modernization Taskforce agreed and urged the Government of Ontario to enhance Ontario’s investor protection framework. The Taskforce stated: “a binding, reputable and efficient [dispute resolution service] framework… would be a significant improvement to the retail investor protection framework.” The reason is simple: an investor who goes through an independent complaint process should not be left negotiating over whether the firm will respect the outcome.
The latest independent review concluded that while OBSI is generally working well, the lack of binding decisions undermines the system’s effectiveness and credibility. The review reaffirmed our concerns that lowball settlements demonstrate the need for binding authority. In some cases, consumers received substantially less compensation than OBSI determined was fair. The reviewers concluded that the lack of binding authority creates an unequal playing field and makes the resolution process less efficient.
After four independent reviews recommending binding authority and years of public consultations, the Canadian Securities Administrators (CSA) are finalizing a framework to make it happen. Together with many other consumer advocates, we look forward to seeing it cross the finish line. Saskatchewan, Manitoba and New Brunswick have already introduced legislation to make it a reality. FAIR Canada and coalition members call on the remaining provinces and territories to do the same to strengthen the complaint-handling system.
The reviewer also agreed with our view that OBSI’s systemic issue reporting needs strengthening. OBSI’s role gives it a unique view into complaints across firms and products, helping it to identify recurring or emerging problems before they become more widespread. The review found that OBSI’s approach to identifying and reporting possible systemic issues has been overly cautious and recommended a stronger “when in doubt, report” approach.
Speeding up complaint reviews is another area that needs improvement. Growing complaint volumes have delayed the assignment of complaints to investigators. However, OBSI’s public reporting excludes that waiting period, so it does not reflect consumers’ experiences. Consistent with FAIR Canada’s comments on more transparent timelines, the reviewer recommended measuring timelines from the point at which consumers enter the OBSI process, rather than from when an investigator is assigned. The reviewer further recommended that OBSI adopt and publicly report against a 30-day target for assigning complaints.
Overall, the review echoed many of FAIR Canada’s comments. Most critically, it reinforces what FAIR and the Taskforce have said for years: OBSI cannot fully protect consumers without binding authority.