An investor advocacy group is cautioning investors from dealing with firms who don’t show “good faith” in dealing with external dispute resolution processes.

Last Friday, the Ombudsman for Banking Services and Investments (OBSI) published its second ever refusal by a firm to follow its recommendation to compensate an aggrieved client, and the first ever refusal by an investment dealer. Publishing the details of a firm’s refusal is OBSI’s only real tool to try and compel a firm to accept its decision for compensation.

On Wednesday, the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) said that it supports OBSI’s decision to exercise its “name-and-shame” power after taking extraordinary steps to attempt to resolve the case. OBSI has stated its intention to publish more refusals in the coming weeks, if the cases aren’t resolved in the meantime.

“Stakeholders in the financial markets (including consumers) need to consider ‘cold shouldering’ a firm that is named and shamed, meaning that they decline to do business with them. This is how ‘name and shame’ is given bite. If stakeholders do not ‘cold shoulder’ a firm that is unwilling to comply with an OBSI recommendation, the effectiveness of ‘name and shame’ is undermined,” FAIR says.

As a result, it is cautioning consumers, “from obtaining financial services from firms who refuse to enter into external dispute resolution processes in good faith. In our view, this reflects poorly on an investment firm’s commitment to dealing fairly with its clients and a lack of integrity in resolving legitimate client complaints.”

OBSI has been trying to resolve a number of complaints where investment firms are refusing to accept its recommendations for over a year now, including offering the firms involved an independent review of the affected cases. Yet this offer was only accepted in one instance. And, FAIR says that, in its opinion, declining an independent review “demonstrates a lack of a credible factual basis upon which to reject OBSI’s recommendation.”

“We hope that other OBSI participating firms recognize the poor public perception associated with a refusal to accept OBSI’s recommendations and work to maintain and improve upon the existing non-statutory ombudsman system so that complaints are resolved in a manner that is fair and reasonable,” it adds.