Thursday, November 2, 2017

The Ombudsman for Banking and Investment Services (OBSI,

Per its Terms of Reference , OBSI is an independent non-profit organization that operates in the public interest and is incorporated under the Canada Not-for-profit Corporations Act. OBSI is Canada's sole CSA recognized independent dispute-resolution / Ombudsman service for investors and small businesses with a complaint they can't resolve with their investment firm ( or bank). They are overseen by banking and securities regulators as well as a board of directors, the majority of which are not currently involved with the financial services industry.. A Consumer and Investor Advisory Council provides input to the Board on prevailing financial consumer issues. OBSI should not be confused with internal bank “Ombudsman” who are not independent of the bank or related investment dealer.

While they can only investigate complaints about firms that participate in their service, most banking services and investment firms in Canada do participate in OBSI. OBSI can recommend compensation up to $350,000. In Canada, and around the world, regulators and ombudsman offices in financial services are typically funded by the industries they cover, as opposed to the general taxpayer. There is no charge for the service.OBSI is able to handle inquiries in over 170 languages.

OBSI can consider your complaint if:
·   your firm has had 90 calendar days to deal with your complaint but has yet to provide you with its final response, or

·  your firm gave you its final response on your complaint but you are still unsatisfied. Once you receive the final response, you have 180 calendar days to bring your complaint to OBSI.

OBSI is neither a court nor a regulator, and they do not fine or discipline firms or individuals. Their recommendations are not binding on either party, but they have over a 80% record of acceptance of their recommended settlements from both firms and clients. The alternative, civil litigation, is out of reach for complaints involving less than $250,000. OBSI work on fairness principles and hold dealers accountable rather than individuals, which is a real positive for the retail financial consumer.

If you disagree with OBSI investigation conclusions, and: believe they have failed to consider the issues or information provided, have new information that not previously provided , or have reason to think their decision is unfair or unreasonable, then you can request they reconsider the decision.
While OBSI do not handle matters that have already been through a court or an arbitration, if a client is not satisfied with their conclusions, investors are free to pursue their case through other processes including the legal system and IIROC arbitration, subject to statutory limitation periods. Unlike dealer-related internal bank “ombudsman”, the statute of limitations time clock is stopped while OBSI investigates complaints.

OBSI has some warts that you should know about:

·         Their recommendations are non- binding 

·         They cannot properly investigate investment portfolio complaints involving insurance products like Segregated Funds

·         That do not have the mandate to investigate systemic issues 

·         Their Board does not have a dedicated Retail financial Consumer Member in the same way industry participants do.

In addition there are a few other issues you should be aware of. Investor advocates have questioned the accuracy of published complaint statistics/disclosures, complained about a board policy that allows bank-owned investment dealers two FINAL response letters that undermines regulatory intent and a process that enables a significant number (18%) of low-ball settlements that evade public Name and Shaming.   

Notwithstanding these warts, OBSI is known for fair settlements and user satisfaction is relatively high – 70 % of investor respondents to a satisfaction survey strongly agree that the final written recommendation was clear (55% of banking respondents strongly agree). About 90% of investors felt that their complaint had been dealt with promptly.

Of the multiple and convoluted options retail investors have for compensation from their investment dealer, OBSI is the most practical for the average retail investor. OBSI, while imperfect, is the most consumer-friendly alternative for those seeking compensation. The “hand holding” type of service provided by OBSI is essential because most retail investors cannot effectively articulate a legitimate complaint even if they have one.

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