Sunday, July 23, 2017

Should I use the institution's internal “ombudsman “?

Investment dealers are required to respond to a complaint within 90 days. Offers for compensation are binding on the dealer.
After you receive a response to your complaint from the dealer ( or bank) you have a few choices. You can accept the decision, abandon the complaint altogether , use IIROC binding arbitration ( if an IIROC dealer), take legal action , refer the complaint to the Ombudsman for Banking Services and Investments (OBSI ) or the firm may “encourage” you to use their internal "ombudsman". The banks and insurers have created these entities to give the institution a second chance. We view the diversion from regulator-approved OBSI as an unnecessary step.
It is well known that the more steps in a complaint process, the greater chance the complainant will give up and drop the complaint. If the internal “ombudsman” confirms the dealer position, most complainants will not have the will or fortitude to start all over with OBSI .It is entirely possible a complainant with a very valid claim could be shortchanged.
An internal “ombudsman” is run quite differently than Ombudsman authorized by regulators. Such entities lack the transparency  real and perceived independence and disclosures as compared to true  institution - independent ombudsman services such as a OBSI.Recommendations by an internal " ombudsman" are not always binding on the parties involved.The use of an internal “ombudsman” is entirely voluntary but you may be nudged by the dealer to use it, rather than OBSI. Once you receive the final response from the dealer , you have 180 calendar days to bring your complaint to OBSI. Before consenting to use an internal “ombudsman” you should be informed. There are risks and pitfalls to consider. You need to ask some questions before giving consent.
The list of questions we provide is comprehensive. But don't worry about asking them all. After the first few questions , based on our experience, you will quickly become uncomfortable with the responses or worse, you will not get any responses. That's why Kenmar suggest going directly to the Ombudsman for Banking Services and Investments (OBSI) if you intend to pursue your complaint. At least that way you can avoid being rejected a second time by the same institution.
OBSI is a free, institution-independent ombudsman service endorsed by securities regulators and overseen by them. Unlike a bank or insurer internal " ombudsman", a complaint to OBSI stops the limitation time clock. Compensation can be recommended up to $350,000 .In 2016, nearly half ( 45% ; 150/323) of investment complaints ended with monetary compensation - average $ 15,552 . The latest OBSI satisfaction survey showed that 75% of respondents rated the quality of service as good / very good. Visit for more information
These are the questions an investor should be asking before voluntarily opting to use an internal bank ombudsman:
Performance statistics
> In what percentage of complaints do you recommend restitution greater than that offered by the dealer?
> What is the average and target time to investigate a complaint?
> What are your user satisfaction statistics?
> Have you ever been employed by the dealer/ bank before becoming ombudsman?
> Is any part of you or your staff compensation package tied to bank profitability?  
> To whom do you report?
> Do you receive company stock options? Shares?
> Who approves your annual operating budget?

          > Are your offices and locale physically separate from the dealer/bank ?
> Are you overseen by a regulator or other independent organization?
> Are you periodically audited by a third party and are the results made public?
> Do you assist Complainants in formulating their complaint?
> What is your loss calculation methodology?

> How does your investigation process work?
> Is there a dollar limit on your recommended compensation? 
          >What happens to my case file records after you provide me with a response?
> Do you deal with systemic issues ?

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