Anatomy of an internal Ombudsman: Office of The TD Bank ombudsman

Anatomy of an internal Ombudsman: Office of The TD Bank ombudsman

The Office self-identifies itself as an ombudsman. The Office will investigate complaints and act as a liaison between customers and all business areas within TD Bank Group in Canada, including: TD Canada Trust, TD Wealth, TD Insurance, TD Auto Finance, TD Commercial Banking, & MBNA. The Office does not report directly to any of these business areas .Complaints falling within their mandate are free of charge to TD customers.

TD’s If You Have A Problem brochure https://www.td.com/document/PDF/to-our-customer/td-customer-care-en.pdf  states under the heading Additional resources – external agencies states “If you require further assistance after the decision of the TD Ombudsman [Emphasis added], the following independent services can provide you with information and a further review of your complaint. Please use the information below to contact the agency that deals with the TD business group where your concern arose. These agencies may contact TD’s internal complaint resolution staff – including the TD Ombudsman’s Office – to facilitate their investigation and work toward the earliest possible resolution of your complaint”. This is incorrect – investors with complaints DO NOT have to engage with the TD’s “ombudsman” before they can access the Ombudsman for Banking Services and Investments ( OBSI). The brochure also does not warn investors that the statute of limitations time clock continues to count down while the investigation is in progress.

The TD-OBSI Relationship

A May 2,2011 NP article reported that sources had said that TD Securities, RBC Capital Markets Ltd. and Manulife Financial Corp. had filed an application with the Investment Industry Regulatory Organization of Canada (IIROC) for an exemption from the mandatory provision that requires them to resolve disputes through the Ombudsman for Banking Services and Investments (OBSI). The application was rejected but the fact it was made says something about TD’s aversion to OBSI.

In May 2011, Kerry Peacock, executive vice-president branch banking at TD Canada Trust, resigned from the 10-member board of OBSI in the wake of an attempt by TDWaterhouse Canada Inc. to opt out of using the services of OBSI. There was also pressure for Luc Papineau, a senior executive at TD Waterhouse, to step down from OBSI’s board. At the time, consumer advocate groups asked IIROC to replace Mr. Papineau, who was also a member of IIROC’s Quebec District Council, because of TD’s criticisms of the banking and investment industry mediator. Mr. Papineau and Ms. Peacock were two of the three industry representatives on OBSI’s board who were nominated by SRO’s.

In  October 2011, TD Bank Financial Group decided to withdraw all banking complaints from OBSI ( RBC did that in 2008 and National Bank November of this year).These banks now use ADR Chambers Banking Ombudsman (ADRBO), a for-profit mediator, to handle banking complaints that aren’t resolved by the bank’s own internal complaint handling process. ADRBO is regulated by the Financial Consumer Agency of Canada (FCAC).  Investment complaints involving TD and RBC still must go to OBSI.

At that time of withdrawal, OBSI’s annual report showed TD leading in complaints by consumers. TD was the subject of 131 banking case files opened by OBSI (33 % of the total) and 59 investment case files (15 % of the total).TD’s abrupt decision to leave - with just 5 days’ notice — created financial exposure to OBSI. Quick action to change its Bylaws preserved TD’s funding for the rest of OBSI’s fiscal year. The then TD ombudsman Paul Huyer said OBSI’s slow response time was an issue. He hoped to see all complaints resolved within 90 days by ADR Chambers. OBSI resolved straightforward banking complaints in 55 days on average, according to its report. But for all banking case files, the average response time was 126 days.

“Allowing banks to choose a dispute resolution provider gives all the power to the financial institution and none to the consumer,” Peggy-Anne Brown, then OBSI Chair, said in her opening message to the report. “Make no mistake, this is a power struggle between the interests of consumers/investors and the interests of large and powerful financial firms.” she said.

The ombudsman’s Office

Ms. Kerry Robbins has been the TD Ombudsman since September 2014. Kerry has worked at TD for over 18 years in increasingly senior roles in a wide variety of areas, including Direct Channels, Branch Banking, and Real Estate Secured Lending. . Ms. Robbins therefore has friends and associates among bank staff. She has a BA from King’s College at the University of Western Ontario and a MBA from Anglia Business School in Cambridge, England. She is also listed as a Board Member of the Canadian Centre of Ethics & Corporate Policy.

According to TD, the TD Ombudsman’s Office is an independent body within the Bank charged with reviewing customer complaints that remain unresolved after the completion of Steps 1 and 2 of TD's internal customer problem resolution process.

According to the 2016 Annual report, the Office opened a total of 749 cases, representing an 18% increase over 2015. The average time to complete a review was 61 days, with 95% of the cases closing within 90 days. About 85% (637) of the cases were either not resolved or were partially “resolved” at least using TD’s definition. The majority of the case files originated from the Branch Banking network but 75 (10%; 6% in 2015) of cases related to wealth/ investments. This means that complainants who had a choice to use OBSI after the investment dealer decision chose or were nudged into using the unregulated TD ombudsman’s Office instead of CSA- approved OBSI, a non-profit agency supported by participating firm funding . It can make non-binding recommendation. According to an independent reviewer’s report, 18% of its recommendations are low-balled by investment dealers. Investor advocates argue that OBSI’s inability to make participating firms follow its recommendations is a denial of access to justice.

In March, 2017 there were media reports of “hundreds of current and former TD Bank Group employees” who described feeling pressured to meet high sales goals, with some claiming to have raised credit and overdraft limits without customer consent. Signature forgery was also reported. In response to the news reports, the Financial Consumer Agency of Canada (FCAC) moved up its review of the financial sector to April, during which it plans to focus on sales practices and whether Canada’s banks are following guidelines regarding express consent and disclosure.

Some TD ombudsman characteristics:

Location: TD Centre in Toronto. Co-located with senior TD executives, this is generally regarded as an indicator of non-independence.

Employment: It is not revealed who can terminate the ombudsman or under what conditions.

Coverage: Assumed to be all TD wealth units including discount brokerage.

Limitation clock: Unlike OBSI, a complaint to the Office does NOT stop the limitation time clock.

Reports to: CEO and Governance Committee of Board of Directors

Compensation source: TD - no detail provided-could possibly include salary, profit sharing, bonus program and stock options.

Funding: By TD Corporate from general revenues

Governance: Not revealed

Applicable regulator: Not regulated by CSA, IIROC or MFDA

Loss calculation methodology: Not disclosed.

Organizational Independence: Asserts independence from business units but is part of the same corporate family.

Social independence: As a long term TD employee , the TD ombudsman has a network of associates and friends among several TD business units to be investigated.

Standard. None cited. Typically would be ISO 10003 Quality Management – Customer Satisfaction – Guidelines for Dispute Resolution External to Organizations or the Forum of Canadian Ombudsman www.ombudsmanforum.ca/en/  We do not believe the TD ombudsman meets the criteria, particularly independence.

Decision stature: Unable to elicit a response to our enquiry- we believe recommendation is non-binding on applicable TD Bank business unit.

Dollar cap: Not disclosed

Forms to be signed: Not available on website

Target cycle time: 90 calendar days

Mandate Restrictions: Unless there are extenuating circumstances, the Ombudsman’s Office will not review complaints relating to bank policies, including credit granting or risk management decisions ;interest rate levels; other charges or fees that are disclosed; or matters where legal action has already commenced or has been concluded.

Summary

TD has a controversial relationship with the CSA-recognized Ombudsman, OBSI. The TD ombudsman is not independent. The internal TD bank “ombudsman “ service is strictly optional. There is no need whatsoever to utilize that service. After the investment dealer has submitted its final response letter or after 90 days of filing a complaint, complainants have an immediate right to access dealer- independent OBSI. They must file a complaint to OBSI however within 180 calendar days. A complaint to OBSI stops the limitation time clock while it conducts the investigation.

Given its lack of independence, unknown governance and opacity, the use of the internal “ ombudsman” is a questionable choice .It is a well  established fact that the more stages in a complaint handling process , the less likely a complainant is to see it through to completion .That is why investor advocates suggest going to OBSI after the firm has had two chances at satisfying the complainant.

The internal “ ombudsman'  issue should be addressed in the consumer component of the review of the Bank Act - along with many other issues related to OBSI, the FCAC, For-Profit external dispute resolvers, conduct standards etc.

References:

·         MEDIA RELEASE: CONSUMER AND INVESTOR ADVISORY COUNCIL TO OBSI ALARMED BY TD BANK DECISION  26/10/2011 https://www.obsi.ca/en/about-us/resources/Documents/MEDIA-RELEASE-CONSUMER-AND-INVESTOR-ADVISORY-COUNCIL-TO-OBSI-ALARMED-BY-TD-BANK-DECISION.pdf

·         TD Bank: Do you Really Care about Your Customers? https://www.linkedin.com/pulse/td-bank-do-you-really-care-your-customers-td-thebully/

·         FAIR Canada Letter to OBSI Joint Regulators Committee re Use of " internal Ombudsman" by Registered Firms When Responding to Investment Complaints   https://faircanada.ca/submissions/letter-obsi-joint-regulators-committee-re-use-internal-ombudsman-registered-firms-responding-investment-complaints/ 
·      PIPEDA Report of Findings #2016-006: An insurance company’s internal ombudsman office is not a “formal dispute resolution process” under PIPEDA - Office of the Privacy Commissioner of Canada In order to qualify as “a formal dispute resolution process” pursuant to paragraph 9(3)(d) of PIPEDA, as a basis for withholding access to personal information, the process’s purpose must be to resolve a dispute and the process itself must be formal. The formal process requirement mandates the presence of a framework or structure, either legislated or agreed to by the parties to the dispute; in other words, the resolution of the dispute must take place in accordance with recognized rules.https://www.priv.gc.ca/en/opc-actions-and-decisions/investigations/investigations-into-businesses/2016/pipeda-2016-006/

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