The number of complaints handled by the Ombudsman for Banking Services and Investments (OBSI) dipped slightly in 2013, but recommended compensation went up, reveals the organization’s annual report.
OBSI published its annual report today, indicating that it opened 641 total cases last year, down from 656 in the previous year. Both banking and investment complaints declined slightly from 2012 — with 434 investment complaints in 2013, down from 446 in 2012; and, 207 banking complaints last year, compared with 210 the previous year.
The dispute resolution service recommended almost $4.9 million in total compensation in 2013, with the vast majority ($4.7 million) coming on the investment side. This is up from almost $3.8 million in total compensation ordered in 2012.
Overall, less than a third (30%) of all case files closed during the year ended in a recommendation of monetary compensation for the client, which is more or less unchanged from the previous year. The rate of recommended compensation was much higher in the investment side (37%), versus just 12% on the banking side. Additionally, OBSI notes that three banking complaints ended in some form of non-monetary restitution, such as corrected credit bureau rating.
Firms also refused to compensate clients in 10 cases, representing almost $1.4 million in recommended compensation, OBSI reports.
Suitability remained the top issue on the investment side, OBSI reports. It also notes that it saw an increase in issues involving unrated high-yield debt securities. “In this low interest rate environment, investors are looking for higher returning income investments. While some higher yielding debt securities may provide that to investors, there is a higher degree of risk involved,” it says in the report.
The biggest issues in terms of banking complaints involved mortgage loans (prepayment penalties), credit and debit cards (fraud and chargebacks), personal loans and lines of credit (collection and credit ratings), GICs, and issues with personal bank accounts.
In the year ahead, the service is looking to continue improving its timeliness. Late last year, it announced a series of measures designed to help speed up service on the investment side. During the year, only 16.7% of investment complaints were resolved within its 180-day benchmark. Whereas on the banking side, it closed 92% of its files in less than 120 days. The average number of days taken to close straightforward investigations on the banking side went from 41 days to 31 days; and, the average for all investigations went from 93.5 days to 67.5 days in 2013, it notes.
Investment complaints also consumed a higher share of OBSI’s resources in 2013, the report shows, with 76.0% of its expenses devoted to dealing with investment complaints, up from 64.0% in 2012.
Looking ahead, OBSI is also focused on the planned expansion of its services to all registered dealers, enhanced oversight by the Canadian Securities Administrators (CSA), securing approval as an external complaints body (ECB) on the banking side, and continuing to enhance its operations in an effort to improve timeliness.
The report also reveals that OBSI’s ombudsman and CEO, Doug Melville, has been elected as the new chair of the International Network of Financial Ombudsman Schemes (INFO), which is a global organization of financial sector dispute resolution schemes. “This appointment is a reflection of the high regard that OBSI is held in by the rest of the world as well as the effort that Doug has put into elevating global dispute-resolution standards and practices,” said OBSI’s chair, Fernand Bélisle.