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FAIR Canada Calls on the Government to Ensure Consumer Protection in Banking

FAIR Canada calls on the Government of Canada, as part of its comprehensive review of the consumer protection framework for banking consumers, to implement reforms to the Bank Act so that there is one, independent, national ombudservice for banking complaints and to designate the Ombudman for Banking Services and Investments (OBSI).

The Bank Act currently permits banks to choose the external dispute resolution (EDR) provider that will handle complaints that are not resolved to the consumer’s satisfaction through the bank’s internal processes. FAIR Canada agrees with the World Bank that permitting such a system presents severe risks that a bank will favour the EDR service they consider likely to give them the best deal, creating one-sided competition, and undermining independence and impartiality.

Since these provisions were enacted, we continue to see banks leave OBSI for ADRBO, with the Bank of Nova Scotia’s being the bank to most recently announce such a move. We call on the government to end the ability of banks to choose their own umpire as this results in unfairness to consumers and prevents there from being an adequate consumer protection framework.

FAIR Canada has reviewed both EDR providers currently approved by the Financial Consumer Agency of Canada – the Ombudsman for Banking Services and Complaints (OBSI) and ADR Chambers Banking Ombuds Office (ADRBO). OBSI is the sole dispute resolution provider for investment complaints but there are two for banking complaints. We have serious concerns about the conflicts of interest, misaligned incentives, and level of transparency and accountability at ADRBO.

“Canadians deserve to have their complaint resolved by a body that meets international standards, that is independent of the financial industry, and that governs and serves the public interest, in a manner that is fully transparent and accountable and is accessible to Canadians”, says Marian Passmore, FAIR Canada’s Director of Policy and COO. “Canadians who go to ADRBO to have their complaint addressed are not on a level playing field with those who go to OBSI to have their complaint resolved. This fundamental unfairness should not be permitted to continue”.

FAIR Canada has previously made this request to the Minister of Finance, most recently in its September 2017 submission in response to its consultation relating to the federal financial sector legislative framework and in its joint public statement with the Public Interest Advocacy Centre in March 2018 in response to the Financial Consumer Agency of Canada’s report “Domestic Bank Retail Sales Practices Review.”

For details on FAIR Canada’s review of OBSI to ADRBO, please see this 2018 Comparison.

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September 10, 2018