Canada has a deeply ingrained habit: when investor harm demands a regulatory response, the system produces process instead of remedy. It studies the reform, qualifies it, layers it — and slowly engineers away its teeth. Binding authority for the Ombudsman for Banking Services and Investments (OBSI) has become the defining example.
The consequence of this paralytic addiction to process is predictable and documented. OBSI investigates investment complaints, determines what compensation is fair and still cannot require firms to pay it.
The 2025 OBSI annual report captures the damage directly: “Over many years, we have seen that this can lead to firms offering less than what we recommend as fair in all the circumstances of the case, and consumers accepting these offers because they have no other options. This issue has been noted by many independent reviewers, consumer advocacy groups and the Canadian Securities Administrators.”
Over the past five years, 39% of investment cases with recommended compensation above $100,000 ended in settlements below the level recommended by OBSI. From 2021 to 2025, 20 investment cases resulted in low settlements, leaving consumers short by $795,178.
Behind those numbers are real people. They are typically older Canadians — retirees and near-retirees — who suffered investment losses at the hands of advisors they trusted, pursued a complaint through a process designed to be exhausting and then accepted less than they were owed because fighting further was not a realistic option.
None of that was inevitable. The fix has always been obvious: the ombudsman finds the harm, quantifies the remedy, the result binds. Everything that followed was a decision to avoid exactly that.
The same pattern has played out in other situations where consumer harm was foreseeable and the evidence was already in hand, including bank proprietary shelves. There, a structural conflict of interest was clear, the evidence was unambiguous and the response dissolved into review, coordination, assessment and delay. The file did not die. It was processed. On that file, “priority” became a synonym for indefinite deferral — examine, assess and perhaps someday determine whether the harm was serious enough to warrant action.
OBSI binding has long since earned its place as the poster child of Canadian regulatory evasion. Everyone knows the problem. Everyone knows the remedy. The rest is deliberate obstruction dressed as due diligence.
How binding becomes optional
In its efforts to push back on binding, industry has invoked the spectre of natural justice. The argument, in plain terms, is this: once OBSI’s decisions carry binding force, the law requires a more elaborate process — more formal review rights, more layers, more distance between OBSI’s determination and the final result. A consumer-redress problem is recast as a procedural-risk problem.
The tenets of natural justice are both legitimate and necessary — but that obligation does not require the procedural architecture industry is demanding. Both sides must be heard. Independence matters. Reasons matter. But none of that requires a procedural contraption. A fair process and a binding result are not competing concepts.
The industry’s invocation of natural justice is a sophisticated way of avoiding a serious answer to the consumer problem. By framing binding authority as an invitation to endless procedural layers, they transform a tool of fairness into a tool of obstruction. We must reject the idea that a binding result requires a procedural contraption. A fair, independent investigation followed by a clear, reasoned and final decision is natural justice in action.
That is the problem with the Canadian Securities Administrators’ (CSA) current proposal for a binding model. The risk is no longer simply that reform will be delayed. It is that binding authority will arrive rebuilt as apparatus: layered, overdesigned and review-laden, with enough moving parts to let everyone claim progress while preserving delay, second-guessing and room to dilute the result.
The CSA’s own proposal illustrates the problem. Its framework retains OBSI’s current investigation-and-recommendation model and routes higher-value cases through external decision-makers for second-stage reviews. That is not a binding system. It is the existing system with additional machinery attached.
After years of watching its recommendations discounted, its findings ignored and genuine reform deferred, OBSI has signalled it can work within that framework. That is not agreement. It is the concession of an institution that is out of runway — one that has not so much endorsed this design as absorbed it, ground down by industry resistance and the persistent unwillingness of regulators to demand anything stronger.
OBSI binding now matters beyond OBSI itself. It has become the definitive case study in how Canada handles investor harm: acknowledge it, assign it, process it — and ensure that by the time a remedy arrives, it has been so thoroughly qualified as to be nearly unrecognizable.
Canada does not need a binding model in name only. It needs the one that should have existed years ago: OBSI investigates, OBSI decides, the decision stands. Everything else is performance.