What do I need to know about a banking and investment ombudsman in Canada?
CARP has partnered with investor and consumer advocates and worked for more than 11 years advocating for an independent ombudsman, which is one of severally critically needed measures to protect the financial security of older Canadians.
Without an independent financial ombudsman service, customer complaints related to banking and investment are not handled consistently and compensation orders are not always upheld.
Examples of complaints that require ombudsman services include:
- credit card issues, such as chargebacks or unauthorized transactions;
- banking or loan issues related to transaction problems, loan penalties or information breakdowns;
- investment issues related to common shares, mutual funds or scholarship trust funds such as suitability of investments, fee disclosure and service complaints.
The Ombudsman for Banking Services and Investment (OBSI) is a well-established, independent organization that has been providing dispute-resolution services to Canadian financial consumers for 25 years.
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.
Independent reviews conducted in prior years found that over a five-year period, investors received almost $3 million less in settlements from investment firms than what OBSI had recommended.
The impact of financial loss on older Canadians can be life altering.
How is CARP advocating?
CARP celebrated when the Federal Budget 2022 announced the government’s intention to strengthen banks’ external complaints handling system through the Ombudsman for Banking and Services and Investments (OBSI), a well-established, non-profit body.
At that time Prime Minister Trudeau called on the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, to create a single ombudsperson with binding authority. At that time, the government 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.”
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.
Currently CARP is working hard to ensure a robust and impartial governance structure within the OBSI, as well as the integration of a seniors perspective.
Recently CARP published a submission, asserting key requirements related to a more robust and impartial governance structure:
- 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
How can I get involved?
There are many ways to get involved. Find out more.