The case against binding authority for the Ombudsman for Banking Services and Investments (OBSI) has been reframed. It is no longer primarily about natural justice or procedural fairness. It is about competition.
The argument, advanced in these pages on August 13, is that binding decisions will increase legal and operational risk, that large firms will absorb that risk more easily than small ones, that advice will become more defensive and standardized, and that ordinary Canadians will end up with fewer products and less access.
It is a serious-sounding argument. It is also, at present, largely an untested one.
The logic is straightforward. Binding authority creates risk. Risk changes firm behaviour. Firms narrow product shelves, standardize advice or exit certain lines of business. Consumers are left with less choice.
Each step is plausible. None is demonstrated in the Canadian context.
No evidence has been presented showing that OBSI outcomes have caused firms to reduce product offerings, that any such reduction tracks complaint exposure, or that clients are worse off as a result. A hypothesis about firm behaviour has been presented as if it were already an observed market outcome.
That does not mean binding authority cannot affect behaviour. It can. In financial services, even modest regulatory changes can produce large behavioural responses.
But that is precisely why the evidentiary bar should be higher, not lower. Start with what is measurable.
If firms already comply with OBSI recommendations, as opponents of binding authority often argue, then the incremental direct compensation cost of making those recommendations binding is small. In 2025, total compensation across more than 1,300 banking and investment complaints was about $5.8 million.
That figure may matter to individual firms. But before a $5.8-million annual redress system is used to support claims about product availability, market structure or national productivity, some evidence connecting one to the other is required.
None has been provided.
The argument therefore depends almost entirely on indirect effects — behavioural changes that are asserted rather than measured.
There is another problem with the case against binding authority: the suggestion that the issue has not been adequately examined.
It has.
Binding authority has been debated in Canada for well over a decade. Independent reviews of OBSI in 2011, 2016 and 2021 recommended it. The 2021 review specifically asked stakeholders whether OBSI should have the power to make binding decisions. Industry, consumer groups and other stakeholders had the opportunity to make their case.
The Canadian Securities Administrators (CSA) then went through the issue again.
In November 2023, the CSA published a proposed framework for binding authority and sought public comment. Industry associations, investment firms, investor advocates and others responded. Many raised precisely the concerns now being advanced: procedural fairness, legal safeguards, oversight, costs and potential consequences for firms.
The regulators did not ignore those concerns. They returned in July 2025 with another consultation, this time focused on the proposed oversight structure and additional review and decision procedures.
That process can fairly be criticized. I have criticized it myself. But it cannot fairly be described as a failure to examine the issue.
And the examination has continued. The latest independent external review of OBSI, released in July, again recommended binding authority, this time for both investment and banking complaints.
One can disagree with that conclusion. What is harder to argue is that nobody has looked seriously at the question.
There is an important distinction here.
A demand for evidence is legitimate. A demand that the same question continue to be studied until it produces a different answer is something else.
If new evidence shows that binding authority will materially reduce competition, drive independent firms from the market or restrict access to advice, regulators should consider it. But the fact that previous reviews and consultations did not validate those concerns is not evidence that the reviews were inadequate.
International experience
Nor does international experience suggest that binding consumer redress is a regulatory leap into the unknown.
The United Kingdom is currently reforming its Financial Ombudsman Service. Its March 2026 reforms address the fair-and-reasonable test, alignment with Financial Conduct Authority rules, time limits and mass-redress processes.
They do not propose returning to a recommendation-only ombudsman.
Australia operates on the same basic principle: once a consumer accepts an Australian Financial Complaints Authority determination, it binds the firm.
These jurisdictions debate how binding redress should work. They are not debating whether the final decision should remain optional for the financial institution.
I have my own concerns about the CSA proposal, but they run in the opposite direction.
The proposed two-stage structure, with external review available at $75,000, preserves much of the existing investigate-and-recommend framework while adding another layer of process. My concern is that binding authority is being overengineered in an effort to answer objections regulators have already spent years considering.
That is a legitimate debate about regulatory design. It is not objective evidence that binding authority threatens competition.
Competition matters. Regulatory burden matters. Access to advice matters. But repeating those concerns does not establish that binding consumer redress threatens any of them.
If binding authority will shrink product shelves, push independent firms out of the market or deny ordinary Canadians access to advice, demonstrate it.
After more than a decade of independent reviews, regulatory consultations and industry submissions, this issue has not suffered from too little examination.
Canadians need and deserve a robust ombudservice. It will improve complainant outcomes, client satisfaction and trust in the industry.
What’s not to like?
