A collection of consumer and investor advocacy groups are calling on the federal government to appoint the Ombudsman for Banking Services and Investments (OBSI) as the sole external complaint-handling body for banks.
In an open letter to finance minister Chrystia Freeland, on behalf of the groups, the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) asked that OBSI be designated as the “single, ombuds organization with binding authority” this year.
As it stands, banks are currently able to chose between using OBSI and ADR Chambers Banking Ombuds Office (ADRBO) to address consumer complaints that can’t be resolved internally.
Additionally, in the investment sector, where regulators do require that firms only use OBSI, the lack of binding authority has long been a concern for consumer and investor advocates.
An independent review earlier recommended that OSBI be given binding authority to deal with investment complaints; and regulators have pledged to adopt that recommendation.
However, the industry has vehemently resisted that proposition. Among other things, opponents argue that this would require the introduction of a formal appeal process, along with more rigorous standards of evidence, that would raise the cost of addressing complaints.
Both OBSI and ADRBO are currently undergoing independent reviews, headed by Osgoode Hall Law School professor Poonam Puri. Those reviews are expected to be completed by the end of March.
In the meantime, FAIR Canada’s letter to Freeland said that there is “broad consensus… that the current framework for complaint-handling is not working for many financial consumers and there is an urgent need for improvement.”
It also noted that, in a mandate letter, Prime Minister Justin Trudeau asked Freeland to establish a single, independent ombudsperson, with binding authority in the banking sector.
“We encourage you to act expeditiously on this critical government commitment in 2022,” FAIR Canada said in its letter.
“Designating OBSI under the Bank Act and providing it with the authority to make binding decisions on banks is necessary to advance consumer protection, improve access to justice, and foster fairness and confidence in Canada’s banking sector,” it said.
Along with FAIR Canada, the letter’s signatories include the Canadian Association of Retired Persons (CARP), CanAge, Prosper Canada, Option consommateurs, the Public Interest Advocacy Centre (PIAC), Kenmar Associates, the Consumers Council of Canada, and Union des consommateurs.