As always, the devil is in the details, even when it comes to CARP Advocacy wins.
In spring 2022, CARP and a coalition of investor and consumer advocates including FAIR Canada, Kenmar Associates, and the Consumers Council of Canada celebrated that the government was strengthening banks’ external complaints handling system through an Ombudsman for Banking and Services and Investments (OBSI), a well-established, non-profit body.
This came after over 10 years of CARP and allies advocacy. In 2022, Prime Minister Trudeau noted, “banks should not be able to choose the complaints handling body they participate in, and the system should not be run on a for-profit basis. The new legislation will strengthen Canada’s external complaints handling process and enhance consumer confidence in the system.”
An independent ombudsman is one of severally critically needed measures to protect the financial security of older Canadians.
Do you have a complaint related to authorised credit card payments, loan penalties or information breakdowns? You can find out about more about the OBSI complaints process here.
But while the ombudsman is now in place, there is still no binding authority. In other words, some investment firms simply ignore its recommendations for resolving investor complaints in a fair and impartial manner. More commonly, it means some investment firms pressure customers to accept less compensation than OBSI considered appropriate for the circumstances. Granting OBSI binding decisions will help bring closure to investors’ complaints and boost investor protection in a fair and meaningful way.
CARP and allies strongly support the government’s decision to choose OBSI as the sole External Complaints Body, and are encouraging government and regulators to continue their support by equipping it with the power to make binding recommendations. This essential enhancement to OBSI’s mandate will strengthen its ability to protect consumers and act as a trusted decision-maker.
What is the point of an impartial independent financial ombudsman service which exists to handle banking and investment complaints consistently and fairly, if the recommendations are not followed?
As well advocating for binding authority, CARP is also working hard to ensure a robust and impartial governance structure within the OBSI, as well as the integration of a seniors perspective.
- A new system of Board of Director nominations to ensure a democratic approach and rule out biased ties to the financial service industry as well as term limits;
- A designated seat on the Board of Directors able to represent the voice of seniors and vulnerable populations;
- The establishment of an Advisory Panel;
- Compensation raised to $500,00k
Without an independent financial ombudsman service, customer complaints related to banking and investment (such as unauthorized credit card payments, loan penalties, or information breakdowns) are not handled consistently, and compensation orders are not always upheld. The end result is a confusing complaints process with variable results.
The impact of financial loss on older Canadians can be life altering. Retirees, seniors and vulnerable investors deserve this independent financial ombudsman service, as any undue losses they incur cannot readily be recouped.
Complaints by seniors are disproportionate to the financial consumer population. As well, many impacted are already vulnerable. According to the 2019 OBSI Seniors report more than 30% of complainants over 60 report their household incomes to be below $40,000.
OBSI undertakes independent expert evaluations of its operations every five years. In 2022, Professor Poonam Puri, one of Canada’s leading experts in corporate governance, corporate law, and securities law reviewed OBSI and made a number of recommendations, including that OBSI be given binding authority when rendering its decisions.
Independent reviews conducted last year found that over a five-year period, investors received almost $3 million less in settlements from investment firms than what OBSI had recommended.
You can support CARP with this issue by contacting elected officials and letting them know an independent ombudsman with a fair governance structure matters to you.
Read the letter to Minister Freeland from the Coalition of Concerned Consumer Advocates, of which CARP is a key member.