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OBSI an industry body trying to help the public?

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Re: OBSI an industry body trying to help the public?

Postby admin » Wed Oct 25, 2017 1:16 pm

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ROB MAGAZINE

Got a problem with your bank? Canada’s banking ombudsman probably can’t help

Rita Trichur
RITA TRICHUR

OCTOBER 24, 2017

You might be surprised to learn there is no national consumer protection agency to resolve complaints against banks and other financial institutions.


When Alexis Keach lost her wallet, the Mississauga office manager thought her bank would protect her from unauthorized charges. Thieves stole $1,280 from her chequing account and racked up $1,150 in charges on her Visa card before the Toronto-Dominion Bank froze her accounts.

The agency is an industry-funded dispute resolution service...


Although Keach filed a police report, TD initially refused to reimburse her, claiming that she failed to protect her PIN. She flatly denies sharing the number or writing it down, and argues fraudsters routinely crack those four-digit codes. Keach asked TD to reverse its decision and got some money back. But she wonders what recourse she'll have if the bank refuses to refund the whole amount.

Not only are the banks free to ignore OBSI's decisions—they aren't even required to join


The answer? Not much. You might be surprised to learn there is no national consumer protection agency to resolve complaints against banks and other financial institutions. There is only an official-sounding entity called the Ombudsman for Banking Services and Investments. But OBSI is not a regulator—far from it.

It was a concept cooked up by the banks themselves in 1996 to dissuade the Chrétien government from creating a federal body to tackle consumer complaints


The agency is an industry-funded dispute resolution service, and it's hard to conceive of one with less teeth. Not only are the banks free to ignore OBSI's decisions—they aren't even required to join. That's tough luck for Keach in particular, because TD, along with Royal Bank, have both opted out of OBSI altogether.

So why does such a feeble banking ombudsman even exist? It was a concept cooked up by the banks themselves in 1996 to dissuade the Chrétien government from creating a federal body to tackle consumer complaints. In 2002, OBSI's mandate was expanded to include investment dealers.

But few consumers use OBSI, and those who do are often disappointed.


In theory, OBSI's complaint process sounds promising. The service is free for consumers, and OBSI will review a case if a customer contacts them within 180 days of being turned down by a member bank. The agency says it will provide a written decision within 90 days or explain why there will be a delay. Complaints can be submitted online, mailed or faxed. Last year, the leading subjects of complaints were mortgages, fraud and bank errors.

But few consumers use OBSI, and those who do are often disappointed. The agency sides with customers in less than a quarter of cases. Securities regulators require OBSI to undergo an independent review every five years, and last year's analysis, led by Deborah Battell, a former New Zealand banking ombudsman, highlighted several fundamental flaws.

First, unlike financial sector ombudsmen in other countries, OBSI's decisions aren't binding. Compensation is also a problem. The organization can recommend awards of up to $350,000, but it can't force banks to pay. The firms can choose to pay less. In 2015, among consumers OBSI deemed worthy of compensation, 18% received less than the agency recommended—an average of $41,927 less.

"The real mischief, however, is not that some consumers receive less, but that OBSI's current mandate allows this to happen. It, in effect, tilts the playing field in favour of firms," the report said.

Worse, even if OBSI decides in favour of a customer, a bank can simply ignore its decision. The agency names and shames such institutions on its website, but the fallout is minimal because most Canadians have never heard of OBSI.

Even such a limp overseer proved to be too much for RBC, which pulled out of OBSI in 2008, and TD, which left in 2011 (although their brokerage arms remain). They were irritated with costs and delays. But they also disagreed with many of OBSI's decisions. The year TD pulled out, it had received the most complaints. Instead, RBC and TD hired a private dispute-resolution firm called ADR Chambers to tackle retail customer complaints.

Ottawa needs to give OBSI a lot more teeth, and this is an opportune time to do it. The Liberals are currently conducting the biggest review of the Bank Act in 20 years.

All banks should be required to join OBSI, and its decisions should be binding. The $350,000 cap on compensation also has to go. It is entirely possible that consumers could be owed more than that, and they should also be compensated for any interest and aggravation.

As things stand, there's no mention of OBSI in the initial Bank Act consultation documents at all. This has to change. The number of complaints is rising and consumers deserve proper representation—not bureaucratic window dressing that is neither fair nor effective.


Small Investor Protection Association
Seeking Truth and Justice
http://www.sipa.ca
e-mail: sipa.toronto@gmail.com
tel: 416-614-9128
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Re: OBSI an industry body trying to help the public?

Postby admin » Tue Oct 24, 2017 8:17 am

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15 January 2008
Pamela J. Reeve, Ph.D.
pj.reeve@utoronto.ca
Terms of Reference Review
Ombudsman for Banking Services and Investments P.O. Box 896, Station Adelaide
Toronto, ON M5C 2K3
by email to: publicaffairs@obsi.ca

RE: Consultation Draft
Ombudsman for Banking Services and Investments 0Terms of Reference
I appreciate the opportunity to comment on the proposed revisions to the Terms of Reference of the Ombudsman for Banking Services and Investments (OBSI).
I have read the independent review of OBSI by The Navigator Company (September 2007).

1. SYSTEMIC ISSUES
1a. It is evident from the existing Terms of Reference that, up to this point, Participating Firms have enjoyed certain protections deriving from OBSI investigations, as indicated in section 7 under the heading, “The Ombudsman’s Principal Powers and Duties”:

7. The Ombudsman shall report to a Participating Firm information about any threat to Participating Firm staff or property of which the Ombudsman becomes aware in the course of the Ombudsman’s duties. (page 4)
Nevertheless, up to this point, the investing public has not enjoyed similar protections, given that the Ombudsman has been expressly prohibited, under section 9(c), from conducting investigations that extend beyond a matter reported by a particular Complainant.

In other words, while the Ombudsman has had a duty to inform Participating Firms about potential harms to their staff or property, the Ombudsman, until now, has been prohibited from taking action to protect the public,
e.g. based on discoveries made in the course of investigating complaints, which could have a bearing on other clients.

This is a troubling disparity in the mandate of an organization, which claims to be independent of the financial services industry.

The Navigator report identifies the inability of the Ombudsman to address systemic issues as “a clear flaw in the consumer protection framework.” Investor advocates have called attention to this flaw in the mandate of OBSI for the past several years.

Although the consultation document contains amendments aimed at remedying this “clear flaw,” evidently such change will be too late for some consumers who have been harmed in the meantime. It is discouraging to find yet another instance in the Canadian context where changes necessary to protect the public interest have taken so long to occur.

1b. The definition of “Systemic Issue” (page 2) is too narrow and needs to be expanded along the following lines. Additions are indicated in bold type.

“Systemic Issue” means a matter discovered in the course of considering:

-a Complaint, which may have caused or could cause a loss or inconvenience to one or more other Customers in a similar or other fashion to that experienced by the original Complainant, or a matter, which could cause -a different type of loss or inconvenience to the original Complainant or one or more other Customers, or other issues which may not yet have caused a loss or inconvenience, but which are in breach of securities rules or regulations;

2. REFERRALS TO REGULATORY OR LAW ENFORCEMENT AGENCIES

2a. Section 10(c) on page 7 makes reference to the circumstances where a Firm fails to co-operate in the Ombudsman’s investigation of a potential Systemic Issue or refuses to follow the Ombudsman’s recommendation. Reference is made to the provisions of section 25 with regard to the consequences of such non-cooperation. The concluding sentence in this section contains the phrase, “OBSI may inform the regulating authority of non-cooperation by a Participating Firm.”
This should be changed to “OBSI shall inform the regulating authority of non- cooperation by a Participating Firm.”


2b. Section 10(d) states that “matters which in the judgement of the Ombudsman involve potential regulatory or criminal breaches may be referred to the appropriate regulatory or law enforcement agency.”
This should be changed to “matters which in the judgement of the Ombudsman involve potential regulatory or criminal breaches shall be referred to the appropriate regulatory or law enforcement agency.”


3. REFERRAL OF UNFAIR COMPLAINT DECISIONS BY PARTICIPATING FIRMS TO REGULATORY AGENCIES
As I expect OBSI is aware, the Mutual Fund Dealers Association of Canada and the Investment Dealers Association of Canada have been amending their complaint handling requirements. Member firms of these self-regulatory organizations are required to resolve client complaints in a prompt and fair manner. Evidently some complaints are not resolved fairly.
I refer to the OBSI statistics of the past two years in which 50% of decisions by investment firms were overturned at the outcome of OBSI investigations.


What are the consequences for the firm for having unfairly decided a client complaint? Since complaint handling is a regulatory matter, a provision should be added to the Terms of Reference that where a Participating Firm has unfairly decided a client complaint, the matter shall be referred to the appropriate regulatory agency. This is consistent with the provision regarding referral in the event of non- cooperation.

4. 90-DAY TIMEFRAME FOR INTERNAL COMPLAINT HANDLING
The 90-day timeframe for complaint handling at the firm level is a positive development in the current redress system. Another positive aspect of the present amendments is the strengthening of the requirement that firms should inform complainants of the availability of recourse to OBSI after 90 days, both in the firm’s initial letter acknowledging the complaint, and also in the final letter with the firm’s decision (15(c) and (f)).
The specification of the “90-day” timeframe needs clarification.
This should be specified either as 90 calendar days or 12 weeks to avoid confusion with business days.


Thank you for the opportunity to comment on the proposed revisions. Please do not hesitate to contact me should you wish to discuss my present submission.
Yours truly, Pamela J. Reeve



https://www.obsi.ca/download/blog/257
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Re: OBSI an industry body trying to help the public?

Postby admin » Sun Sep 24, 2017 1:13 pm

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“To be trusted one must be credible”

“To be credible one must be believable”

“ To be believable one must tell the truth”



Obsi does not have mandate to investigate systemic issues
Obsi cannot investigate investment portfolio complaints involving Segregated funds
Obsi have improperly accepted internal bank "ombudsman " as legitimate proxies for investment dealers
Obsi have in effect allowed dealers 180 days to issue a final substantive response
Obsi are unwilling to assign even one board position to a retail investor voice
Obsi do not name and Shame if a victim accepts a low ball offer
Obsi reporting counts accepted low ball offers as successes
Obsi now will be reviewed once every 5 years vs 3 years previously
Obsi have not stepped up to a strategic role for an Ombudsman service
The Consumer and investor Advisory Council ( CIAC) appears to be inactive
Obsi cannot make binding decisions
One board member is from a dealer that has rejected a obsi recommendation
CIAC should be built into the official obsi structure
Obsi do not have a stakeholder complaint system regarding their operations

OBSI should reveal whether it will involve its Consumer and Investor Advisory Council in the process used to identify director candidates (other than industry nominees).

We recommend obsi disclose board meeting minutes as was previously the practice .

We recommend obsi provide statistical reports quarterly as was previously the practice

We recommend that the 180 day period for a victim to file a complaint be used solely for contemplation and consideration of alternatives and that no extension be granted if a victim decides to use an internal bank "ombudsman".

We recommend that obsi dramatically increase promotion of its services among retail investors .

We recommend that the mandate of each Board Committee be publically disclosed and its membership also be disclosed, in order for the process to be transparent .

We recommend that professional service providers eg lawyers to a Financial Service Provider or Industry Entity be prima facie considered not to be independent.

The definition of Director is awkwardly drafted and we recommend that it be revised. We suggest that the community directors be defined as “independent directors” with the overarching principle of independence clearly articulated. OBSI could look to the Canadian Securities Administrators definition of independence set out in section 1.4 of National Instrument 52-110 or another definition used by comparable organizations to OBSI.

We believe that more emphasis needs to be given to knowledge and experience in “consumer and investor issues” and recommend that OBSI have at least three representatives from consumer or investor representatives on its Board. If it does not adopt this recommendation, we urge OBSI to justify as to why not.

We are of the view that iiroc and the mfda not be involved in the nomination of directors since they have oversight responsibility via the JRCThis should be left to IFIC and IIAC as is the case with the banking nominee ( nominated by the CBA)

We are also examining cooling off periods for Directors and a number of other governance issues raised in the 2016 Battell Report.

Kenmar Associates

Sept 24, 2017
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Re: OBSI an industry body trying to help the public?

Postby admin » Sun Sep 10, 2017 1:09 am

of interest is that the official Canadian Ombudsman for Banking Services and Investments (OBSI) was ‘neutered’ in 2013:
“OBSI’s Terms of Reference were amended in December 2013 to remove OBSI’s systemic issue investigative powers.”

Just to be clear what “remove OBSI’s systemic issue investigative powers” means to Canadian investors…it means that if the official Canadian Banking and Financial Services Ombudsman comes across a problem with Mrs. Jones investments, and it appears as if that same problem is popping up in similar accounts all across Canada, that OBSI CAN NOT do more than investigate each victim case, one by one.

Even if it turns out that one million investors are being cheated, gouged or shortchanged by banks or investment dealers, they CAN NOT TOUCH anything that appears systemic. That, ladies and gentlemen is the power of well organized financial crime. OFC
https://www.obsi.ca/en/download/fm/528

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click to zoom in on image

They MUST turn over anything they observe of a systemic nature (could affect millions, could earn banks billions) to the very people whom are paid 3/4 Million Dollar Salaries at the very top and who are paid and hand picked by...the financial industry. (OFC)


The Board of Directors (Chair) of OBSI will inform the CSA Designates (the Alberta Securities Commission, the British Columbia Securities Commission, the Ontario Securities Commission and the Autorité des marchés financiers) of issues that appear likely to have significant regulatory implications, including issues that appear to affect multiple clients of one or more registered firms.

It is now officially against the law for the official banking ombudsman of Canada, to enforce the law....unless they do it as slooooowly as can be done, one case at a time...

Now THAT is a multi billion dollar crime against all Canadians...with the Securities Commissions there to make certain that no one gets caught.


image001.png
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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Aug 14, 2017 9:16 am

From a recent email received. Take it or leave it:

Screen Shot 2017-08-14 at 10.15.26 AM.png


did you know that in April, 2014 Richardson GMP gave the finger to OBSI . As a result they were named and Shamed by a public News Release . https://www.obsi.ca/en/news-and-publica ... ardson-gmp That's bad but what's worse is who IIIROC nominated as their representative on the Board , Out of 178 possible members , IIROC chose a senior executive from GMP as their rep on the OBSI Board of directors. I guess the shaming was inadequate. Gives you confidence in OBSI and IIROC, eh?
--- A.

OBSI Board of Directors https://www.obsi.ca/en/about-us/governance/board-of-directors
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Jun 08, 2017 6:00 am

June 8, 2017

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I just now realized why OBSI was forbidden to investigate systemic matters that harm Canadians financially.......I won’t go into great detail here, but it hit me right after trying to convey something to a FINA Parliamentary Committee in Ottawa on this topic yesterday (see FINA topic in this forum for that story).

below were my thoughts that ‘evolved’ over the ensuing time after making my pitch to the Parliamentary Finance Committee, forgive the incompleteness of these thoughts.....I put there here so I do not forget:

that the layers and layers of ‘regulators’ who serve the financial industry, truly do “serve” the financial industry. Certainly those who are 100% paid by that industry can no more serve two different masters (the one who pays them, and the one they promise to protect (from the payer;)……than any other person or entity can serve two masters.

Hence, the public relations ‘tradeoff’ if I might call it that, or the ‘trick’ that is played upon the public is simply this:

Conflicted regulation and regulators are allowed to give an appearance of protection where in truth only one tiny percentage of protection is given….namely the “one bad apple” level of protection, and never the “bad barrel” itself. As I write this I hear Stan’s words to this effect in my head from perhaps a decade ago…..why do we forget such wisdom and let it be lost.

As I found myself getting emotional yesterday in committee, the benefit of this was that I think it was helping ME to better understand the problem that I must focus upon, going forward…..namely that it is ONLY the systemic issues that allow banks to rob the public of untold billions of dollars,…..and yet it is the systemic issues which are forbidden to be even looked at in our current systems. Here lies the “Ring of Gyges” which according to the Legend of the Ring of Gyges, allows the wearer complete invisibility from any acts they might perform. It is this simple legend which give me (today) perhaps the greatest clarity and understanding of what it is that allows our banks, and our bank owned investment dealers to rob Canadians of billions and billions and billions of dollars with not a whisper of concern.

These organizations have given themselves, gifted themselves, or simply purchased... the regulatory equivalent of the Ring of Gybes.

OBSI was expressly forbidden (in the last couple of years) to look at systemic failures, to investigate systemic failures or to prosecute systemic failures, and it now occurs to me that this is the door into the truth of much of our regulatory problem. They are paid to make a show of finding one bad apple here and there, whilst not letting the public know that the entire barrel is bad, and is ruining our entire supply……our entire society can be robbed with no consequence since the authorities are forbidden to even LOOK.

I am not saying that I discovered anything new here, except perhaps a new insight or understanding, and one that helps me to better understand what it is that I am seeking.


I also noticed this saying on the National Research Council Building which was built in Ottawa in 1933, which greatly inspired me on my quest for the truth

Great is truth, and mighty above all things.
Esdras

CNDNRC_Sign_Ottawa-2.jpg
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Re: OBSI an industry body trying to help the public?

Postby admin » Wed Sep 16, 2015 12:45 pm

At the risk of repeating, or reposting an older article about OBSI, I submit this view from 2011.

It reinforces my personal experience with regulators, self regulators, and anything purporting to be a "protective" agency for investors…..namely that all are either 100% paid by the industry they are supposed to watch, or nearly 100% staffed by persons from or for the industry, or being abandoned/undermined by the industry.

In the case of OBSI they are both abandoning the Ombudsman (a little too consumer fair?) and/or capturing it at same time.

Screen Shot 2015-09-16 at 1.42.57 PM.png


http://business.financialpost.com/news/ ... rs-on-obsi

Industry representatives on the board of the Ombudsman for Banking Services and Investments (OBSI) are coming under fire from consumer groups for what they argue is an apparent conflict of interest.

Kerry Peacock, executive vice-president branch banking at TD Canada Trust, recently resigned from the 10-member board of the mediator in the wake of an attempt by TD Waterhouse Canada Inc. to opt out of using the services of OBSI. Now, there is growing pressure for Luc Papineau, a senior executive at TD Waterhouse, to step down from OBSI’s board.

Mr. Papineau and Ms. Peacock are two of the three industry representatives on OBSI’s board who were appointed by regulators — the Canadian Bankers Association, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). The other is Ed Legzdins, a senior vice-president at BMO Financial Group.

TD’s Ms. Peacock, who was the CBA’s appointee, has recently been replaced by Lynne Kilpatrick, senior vice-president personal banking at BMO.

However, consumer advocate groups have asked IIROC to replace Mr. Papineau, who is also a member of the national regulator’s Quebec District Council, because of TD’s criticisms of the banking and investment industry mediator.

Earlier this month, TD Waterhouse, RBC Capital Markets Ltd., Investors Group Securities Inc., Macquarrie Group and Manulife Financial Corp. filed an application with IIROC and the MFDA to be exempt from using OBSI to resolve disputes with disgruntled customers. That request was rejected by the regulators and since then there have been a series of meetings and discussions to try to resolve the matter.

Unlike banks, investment dealers are required to participate in OBSI but in recent years, a number of the bank-owned brokerages have been aggressively agitating to opt out because they want to use other complaint resolution providers, such as ADR Chambers.

“OBSI has already been irreparably damaged by the public disagreement,” investor protection groups wrote in a letter to industry regulators. “Because of all the negative publicity and hostility, OBSI will never the same again.”

Although there have been criticisms of OBSI, which was created by the financial services industry and funded by it, the dealers are unhappy with OBSI’s suitability and loss assessment process, which is used to determine suitability of investments and assessing investor losses.

According to a consultation paper released by OBSI last week, the majority of investment complaints involve “advice-based accounts,” that is, investors complaining they received poor advice, their investment strategies were unsuitable and that the investments didn’t perform as they expected.

“The overall objective of OBSI’s approach is to determine a reasonable estimate of the financial position the investors would be in had the unsuitable investment advice not been given and acted upon,” explains the mediator’s consultation paper.

OBSI’s compensation limit is $350,000 — five cases in 2010 were settled for more than $100,000. There are an estimated 15 cases in which an investment firm is refusing to act on OBSI’s recommendations.

In 2010, OBSI recommended compensation in 78 banking cases and 177 in the brokerage industry. Customers received compensation from their financial institution in just 20% of banking cases and 38% of the brokerage files, representing a total of about $3.8-million for all of Canada. Among IIROC firms, TD Waterhouse had the most cases with 72, followed by RBC Capital with 28, and 27 for Investors Group.

Investor protection groups argue that while OBSI may be flawed and now “emasculated” by the public criticism, it must still be preserved.

“While OBSI is viewed by many with suspicion due to a perceived pro-industry bias in recommendations, weak governance, excessive cycle times and 100% industry financing, it remains in many cases the only viable option available for aggrieved investors to gain some measure of restitution,” declared a letter sent to William Rice, chair of the Canadian Securities Administrators, the Ontario Securities Commission, IIROC and the MFDA, by Kenmar Associates.

Investor groups say the real issue is why the number of consumer complaints to OBSI have been rising steadily.

They are urging regulators to strengthen OBSI’s accountability and independence and ensure continued mandatory participation by all investment dealers.
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Re: OBSI an industry body trying to help the public?

Postby admin » Wed Jan 01, 2014 6:13 pm

Screen Shot 2014-01-01 at 6.06.36 PM.png


All of the coloured font below are STRUCK OUT of the new OBSI terms of reference. That means that OBSI is forced to ignore or not investigate the systemic abuses, victimizations or crimes of Canada's financial service providers. FREE MONEY.........

Document found here http://obsi.ca/images/Documents/Consult ... _otors.pdf

and also here https://drive.google.com/file/d/0BzE_LM ... sp=sharing

“Systemic Issue” means a matter such as undisclosed fees or charges, misleading communications, administrative errors or product flaws discovered in the course of considering a Complaint against a Participating Firm which may have caused loss, damage or harm to one or more other Customers of the Participating Firm in a similar fashion to that experienced by the original Complainant;

11. The Ombudsman may identify potential Systemic Issues in the course of dealing with individual complaints, and shall investigate them in the following manner:
(e) (f)
(g)
(i) (ii)
(i) (ii)
if a potential Systemic Issue is identified, OBSI will request the Participating Firm to investigate and report on its investigation to the Ombudsman;
if a Systemic Issue is confirmed by the Participating Firm, the Ombudsman will:
offer to work with the Participating Firm to find a fair resolution; and
recommend in appropriate circumstances the Participating Firm compensate all affected individuals or small businesses and take steps to prevent a future occurrence of the issue;
if a Systemic Issue is not found by the Participating Firm and that finding is disputed by the Ombudsman, or a recommendation under section 11 (b)(ii) is rejected:
the Ombudsman will refer the matter to the Participating Firm’s regulator; and
OBSI shall report on a “no-names” basis on the matter in its Annual Review;
a failure by the Participating Firm to co-operate in the investigation of a potential Systemic Issue shall be reported to the Participating Firm’s regulator; and
matters which in the judgement of the Ombudsman involve potential regulatory or criminal breaches will, in appropriate circumstances, be referred to the appropriate regulatory or law enforcement agency.


The image below is my own personal observation (from twenty years inside Canada's investment industry) of how executives, managers and sales-types, feel and treat this great win:

images-2.jpeg
images-2.jpeg (13.23 KiB) Viewed 13313 times
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Dec 19, 2013 10:10 am

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http://www.securities-administrators.ca ... px?id=1205


For Immediate Release
December 19, 2013




Toronto – The Canadian Securities Administrators (CSA) today published final amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. These amendments would require all registered dealers and advisers to use the Ombudsman for Banking Services and Investments (OBSI) as the common dispute resolution service (DRS), except in Québec where the mediation regime administered by the Autorité des marchés financiers will continue to apply.

Requiring that OBSI’s independent dispute resolution services be made available to clients is an important component of the CSA’s investor protection framework. The CSA have determined it is appropriate to mandate this requirement for exempt market dealers and portfolio managers, which CSA members directly oversee. Today’s amendments now hold all registered dealers and advisers (outside of Québec) to the same requirement. Self-regulatory organizations (SROs) had already mandated their members to make OBSI’s DRS available to their clients and this requirement will continue to apply.

“Mandating all registered dealers and advisers to offer dispute resolution services through OBSI is in the best interest of both investors and registrants. Customer complaints will be held to an independent and uniform standard that will establish a level playing field in terms of service levels, costs and outcomes,” said Bill Rice, Chair of the CSA and Chair and CEO of the Alberta Securities Commission.

The CSA is committed to continue its work with OBSI to ensure it has the capacity to effectively discharge its mandate. Published today, participating CSA members and OBSI have entered into a memorandum of understanding (MOU) that creates an oversight framework for OBSI to meet the standards set out by the CSA.

Included in the MOU is a commitment to an independent evaluation of OBSI’s operations and practices within two years of the amendments coming into force and a requirement that OBSI have a fair, transparent and appropriate process for setting fees and allocating costs across its membership.

The amendments to NI 31-103 come into force May 1, 2014, to allow for ministerial approvals required in some jurisdictions. There will be a three-month transition period for registered firms who are not currently OBSI members to comply with the amendments. The transition period will end August 1, 2014. The amendments and the OBSI MOU can be found on CSA member websites.

The CSA, the council of the securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.

http://www.securities-administrators.ca ... px?id=1205
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Jun 13, 2013 12:30 am

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OBSI is officially neutered and neutralized....

Ombudsman launches consultation on terms of reference following new regulations for resolving banking disputes
By James Langton | June 12, 2013 11:15

The Ombudsman for Banking Services and Investments (OBSI) is proposing to give up its ability to investigate so-called "systemic issues", among a variety of other possible changes to its terms of reference.

OBSI launched a consultation Wednesday on a series of proposed changes to the terms of reference that set out its mandate, powers and duties. Among the proposals, OBSI is planning to surrender its ability to expand investigations from an individual client with a complaint in cases where it believes that an issue may have affected a large number of clients.

The move comes in response to new regulations for resolving banking disputes that were set by the federal department of Finance last year. According to OBSI's proposals, those rules require any potential systemic issues to be referred to the federal financial regulator, the Financial Consumer Agency of Canada (FCAC) for investigation.

So, in order to comply with those requirements, OBSI is giving up its ability to investigate systemic issues on the banking side; and, for the sake of consistency, it has also decided to drop that power for investment industry complaints too. "OBSI's board believes that there should be one policy on systemic issues for the entire organization, and the decision by the Department of Finance has necessitated this policy change," it says, adding that securities regulators support this position too.

Some of the other proposed changes include clarifying that it will not investigate any complaint involving segregated funds, referring these issues to the Ombudservice for Life and Health Insurance (OLHI); describing the circumstances where it will accept complaints beyond its typical 180-day deadline; establishing conflict of interest policies; clarifying that clients can pursue complaints in other venues for compensation beyond OBSI's $350,000 limit; and, formalizing its process for "naming and shaming" firms that refuse its recommendations.

It also aims to clarify that its jurisdiction involves making recommendations against firms, even though losses involved are often caused by an individual rep. "Whether the firm then goes back to the representative to try to recover any compensation paid is a business decision for the firm to make and is not part of OBSI's process," it says, noting that the courts have established that investment firms are vicariously liable for the actions of their investment advisors.

And, it also establishes that OBSI will continue to report to firms any threats against them that come to light during an investigation, but that it will now be keeping the identity of the OBSI staffer who reported the threat confidential. It says it's making this change because of several incidents over the years in which OBSI staff have reported these sorts of threats to firms, and have then themselves been exposed to threats from the complaining clients who made the initial threats against the firm. "OBSI believes proper protections for its own staff should be in place if we are to provide this information to firms," it says.
The proposed changes are out for comment until August 12.

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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Apr 15, 2013 2:38 pm

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BUSINESS BREAKING NEWS
The Canadian Press - ONLINE EDITION
New bank regulations create 'Wild West' consumer complaints system, say critics
By: Terry Pedwell, The Canadian Press
Thursday, Apr. 11, 2013 at 12:24 PM | Comments: 0

OTTAWA - New regulations aimed at helping Canadians resolve disputes with their banks will create a "Wild West" complaints system favouring the banks themselves, critics warn.
The regulations "create a stronger, more independent consumer complaint system," Finance Minister Jim Flaherty said in a statement issued Wednesday.

The rules will require banks to belong to a federally approved external complaints body, starting in September, where consumers can go if they are unable to resolve their issues directly with the bank.
But that doesn't mean there will be a single, national body to field such complaints.
New Democrat consumer critic Glenn Thibeault said the new rules will instead create a free-for-all complaints system, allowing the banks to pick and choose who fields the grievances.

The rules permit the banks to select whomever they want to work as a complaints overseer, so long as that body is approved by the Financial Consumer Agency of Canada (FCAC), Thibeault said.

"Rather than having an independent kind of third-party single banking dispute resolution, you have what we're calling the Wild West of providers," he said.
"The banks can now hire whoever they see fit to actually be their dispute resolution mechanism."

The Public Interest Advocacy Group has also warned that having multiple complaints structures will lead to confusion among consumers and lead to inconsistent results.
Until recently, last-resort consumer complaints about the banks were heard by the Ombudsman for Banking Services and Investment (OBSI), a non-profit complaints agency financed by industry members after its creation in 1996.
But the two biggest banks, RBC and TD, pulled out of the agency and instead hired a private mediation firm, ADR Chambers, to handle their consumer complaints.

It was that action that effectively allowed the banks to select their own external complaints body, with no minimum standards and no guarantees for consumers, leading to uncertainty and uneven expectations of outcomes, said Flaherty.

“This new oversight, in tandem with additional compliance monitoring of the complaint system by FCAC, brings needed transparency and rigour to the complaint-handling process, so Canadians can expect faster, more effective recourse when issues arise."
The banking ombudsman expects to be granted approval as a complaints service provider to the banks, agency spokesman Tyler Fleming said Thursday.
"We already meet or exceed all of the requirements," he said. "We'll be submitting our application in September."
OBSI also deals with complaints about the investment sector, representing consumers on behalf of about 600 firms including mutual fund dealers and group scholarship providers, and is hoping to expand its reach through provincial securities regulators.
The new regulations, taking effect Sept. 2, will require banks and other federally regulated financial institutions to maintain staff and procedures to handle consumer complaints through internal processes.

If a complaint is not resolved, consumers will be given the option to contact an external complaints body associated with the financial institution.
The banks, and the external complaints bodies, will also be required to publicly issue annual reports detailing the number and nature of complaints they received and investigated.

http://www.brandonsun.com/business/brea ... html?thx=y

(advocate comments: HEADS THE BANKS WIN, TAILS THE CUSTOMER LOSES? Canada's banks (and ADVOCIS life insurance sellers) prefer to use their own kangaroo court system of "self" regulators, and failing that you can take them to court if you have ten years of your life to waste and can afford a couple hundred grand. Is it wise to deal with those who act more like legal bullies when a complaint occurs? )
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Re: OBSI an industry body trying to help the public?

Postby admin » Tue Apr 02, 2013 4:22 pm

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The financial services industry has many concerns about giving OBSI more power and its campaign to "name and shame" firms
By James Langton | April 2013
The financial services industry certainly has been critical of the Ombudsman for Banking Services and Investments (OBSI) and doesn't back the regulators' proposal to declare OBSI the sole dispute-resolution mechanism for all firms. Yet, there also is broad support for giving OBSI tougher enforcement powers.
Investment Executive (IE) sought the industry's views on the current state of dispute resolution in two supplemental questions in our 2013 Regulators' Report Card and found that, by and large, what the industry truly wants is a more effective ombudservice.
After operating in the background for years, OBSI has come under increasing criticism from the industry over the past couple of years - and it's facing growing resistance to its recommendations. Late last year, amid mounting intransigence from the industry, OBSI felt compelled to deploy its only enforcement power - publicly naming firms and detailing their cases - against several firms in cases in which OBSI was unable to get those firms to accept its recommendations.

Around the same time, the Canadian Securities Administrators (CSA) proposed that all firms be required to use OBSI to resolve customer disputes. Currently, only firms that belong to the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) are obliged to use OBSI.

Although some other types of securities firms (such as exempt-market dealers and scholarship plan dealers) use OBSI's services, the CSA proposal would make it mandatory for all firms. The goals are to minimize confusion for clients and shore up OBSI's status.

Yet, those surveyed by IE were split over whether this is a good idea. When compliance officers (COs) and company executives were asked whether they are in favour of the CSA's proposal, 60% of those who answered said, "No." If those who declined to offer an opinion (almost 25% of those surveyed) are included, slightly less than half of survey respondents were against the CSA's proposal and about one-third supported it.

Among those who objected to the CSA's plan, the reasons most often cited included the belief that OBSI doesn't understand the industry well enough; the belief that OBSI is biased in favour of clients; and the preference that no organization be given a monopoly over this aspect of the business.
"I'm totally against this proposal," says a CO with an Ontario-based mutual fund dealer. "Banks are fighting to avoid it. And if they are finding reasons to get out, then imagine what it's like for small companies."

Indeed, OBSI suffered the withdrawal of a second big bank in late 2011 and saw the federal government refuse to mandate bank participation in OBSI's service last year in the finalized rules for bank-related dispute resolution.
However, opposition to the CSA proposal to mandate participation for all securities-related firms was far from unanimous; in fact, a healthy share of survey respondents supported the idea.

In particular, supporters cited the benefit of streamlining the dispute-resolution process and making it easy for clients to navigate. Some survey respondents also objected to the idea that firms should be able to choose, and pay, the organization that would serve as the judge in their disputes with clients - effectively, the approach that the federal government has endorsed for the banks.
"It's not fair to allow banks to hire their own dispute-resolution [service] because it's a conflict of interest," says an executive with an Ontario-based mutual fund dealer. "The CSA's proposal is one way to avoid that."

Although there was no unanimity on whether the CSA proposal makes sense, both sides of the issue apparently believe some reform at OBSI is needed.
For example, one respondent who objects to the CSA proposal and doesn't like the idea of OBSI being the last word on customer disputes suggested there needs to be an appeal process.
Another respondent who supports the CSA proposal added a caveat: "I've heard there is a lack of industry knowledge among [OBSI's] investigators, so that should be addressed."
Another major area in which the industry would like to see some changes is in OBSI's reliance on "name and shame" as its only recourse when a firm refuses one of OBSI's recommendations.
IE specifically asked survey respondents whether they believe that the recent spate of "name and shame" actions has been effective. Of those who answered the question, 77% said, "No." Overall, almost 30% declined to answer and just 17% said that it has worked.
"For a dispute to get to that point - that a firm absolutely refuses to comply - it's because [the firm] believes it's in the right," says a CO with an Ontario-based fund-management firm that also is an exempt-market dealer. "Then, all OBSI can do is threaten to tell on [the firm]. I don't think it's a workable model."
Indeed, the industry doesn't have much faith in the "name and shame" process. Some survey respondents said it's just not effective because clients aren't aware of it, while other respondents worried that it's a punishment that really can hurt only a small firm because a big dealer isn't going to feel the impact. And some respondents said that this practice taints the industry overall and doesn't stick to the firm in question.
Yet, despite this widespread skepticism about OBSI's role, there also was a strong sense that the ombudservice needs the ability to enforce its decisions.
"'Name and shame' is such an unprofessional way of resolving a complaint," says a CO in Ontario with a mutual fund dealer. "OBSI would be more effective if it had the power to enforce its rulings."
Of course, the industry doesn't simply want OBSI empowered to enforce decisions in its current state; it needs greater oversight.
"[OBSI] needs a way to enforce its decisions," says a dealer in the Maritimes. "But I have heard the concerns about its process, and I think that should be examined."
The industry may not be happy with OBSI, the regulators' plan to make the service mandatory or OBSI's "name and shame" power, but what industry players appear to want is an ombudservice that has both the power and the ability to resolve disputes.

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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Mar 18, 2013 9:20 am

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An amazing success story:) !!!

After TD Bank and RBC unilaterally "opts out" of the industry mandated Ombudsman (OBSI) because they OBSI people calculated settlements for abused clients that included "lost opportunity" calculations (a little too FAIR??)........these two banks went and hired their own private referee service. ADR Chambers is a respected group of retired judges (or similar) who have a private commercial mediation business.

For these two banks to remove themselves from a system by which all participants in the industry were agreed to use (OBSI) is a true slap in the face for objective justice in the view of many.

But.......the good news is that with their new, privately hired service, they can now close your complaint file in a far shorter time, as the enclosed report alludes to. I am not certain that closure of the file is what many financial victims are seeking.......but it seems to work for the banks:)


http://www.bankingombuds.ca/docs/ADRBO% ... 202012.pdf
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Re: OBSI an industry body trying to help the public?

Postby admin » Sun Dec 09, 2012 9:47 am

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OBSI calling out firms will only work if there is enough "shame"
By James Langton | December 2012

After more than a year of trying to hash out a solution, the Ombudsman for Banking Services and Investments (OBSI) has reluctantly begun "naming and shaming" firms that are refusing to comply with its compensation recommendations. It's a step that may fundamentally determine the dispute-resolution service's future.
The ability to call out publicly the firms that decline to follow OBSI's recommendations is the ombudservice's only real enforcement power, and yet it has rarely been used. (For more, see pages 27 and 30.)
Until now, the ombudservice has had its hand forced this way only once before. In 2007, a mutual fund dealer was outed for refusing to comply with OBSI's recommendation.
But, in November, OBSI announced two more refusals and warned that there may be more to come. The decision to start "naming and shaming" firms comes almost a year after securities regulators called on OBSI to try to resolve 21 so-called "stuck" complaints, in which firms were refusing to comply with OBSI's recommendations.

Since then, about a third of those complaints have been settled. Only one of the firms involved has taken OBSI up on its offer for an independent review of these cases in order to determine whether OBSI's investigation or conclusions are flawed. The rest of those cases remain stuck.

And so, OBSI is resorting to naming the firms involved and publishing its investigation reports — a move that doesn't get the clients their money back, but, OBSI hopes, may deter other firms from refusing its recommendations in the future.

"The publicity will hopefully play a role in settling some cases," notes Tyler Fleming, director of stakeholder relations and communications with OBSI. "But there are others where discussions have resumed recently after we notified them we were moving to publish and informed the regulators."

In the two cases so far in which OBSI has given up hope of settling, the ombudservice has announced: Toronto-based investment dealer Octagon Capital Corp. refused to follow OBSI's recommendation that Octagon compensate an aggrieved inves-tor to the tune of $181,339; and Markham, Ont.-based mutual fund dealer W.H. Stuart and Associates (WHS) declined to comply with a $41,066 compensation recommendation.

Neither firm has commented on OBSI's move. But, in both cases, the investigation reports published by OBSI indicate that the clients in question were victimized by rogue reps.

The rep involved in the Octagon case was sanctioned by the Investment Industry Regulatory Organization of Canada for making unsuitable recommendations and engaging in unauthorized trading. As for the WHS case, the rep was criminally convicted for theft involving a pyramid scheme that resulted in large losses to clients.

Nevertheless, in both cases, OBSI concluded that the clients were unsuitably invested, and that the firms are liable for their losses. But with the firms refusing to agree to OBSI's recommendations, the ombudservice's only option is to "name and shame" these firms.

This is a significant step for the clients, who now are unlikely to see any compensation, and the firms, which will suffer the bad publicity — but, perhaps most of all, for OBSI itself, as it will probably reveal whether this sanction has any significance at all.

In the wake of the first announcement, investor advocacy group the Canadian Foundation for Advancement of Investor Rights (a.k.a. FAIR Canada) cautioned investors against dealing with firms that refuse OBSI's recommendations: "Stakeholders in the financial markets [including consumers] need to consider ‘cold shouldering' a firm that is named and shamed, meaning that they decline to do business with them. This is how ‘name and shame' is given bite. [If that doesn't happen,] the effectiveness of ‘name and shame' is undermined."

Indeed, an independent review of OBSI that was carried out last year by the Melbourne, Australia-based Navigator Co. Pty. Ltd., concluded that fundamental reforms are necessary for OBSI to retain its credibility and effectiveness. Among other things, it called for OBSI to have the power to enforce its decisions, not simply to "name and shame."

A GREAT RISK
Phil Khoury, managing director of Navigator, who wrote that independent review of OBSI, says that OBSI's decision to start naming and shaming firms, "absolutely illustrates the case for OBSI to have binding powers, which in turn would require some of the other accompanying ‘protective' recommendations, such as an appeal mechanism, governance reforms, etc.

"‘Name and shame' only works if there is enough shame," he adds. "The great risk for any ‘name and shame' regime is that the naming becomes too commonplace for the ‘shame' to have any serious, lasting impact on firm reputations."

If firms begin refusing OBSI's recommendations routinely, Khoury adds, "[OBSI's] credibility and ability to operate effectively will be seriously damaged."
And the harm will not be felt by just clients whose compensation recommendations are refused.

Khoury warns that "consumers will inevitably start accepting low-ball settlement offers" rather than run the risk of a refusal. More firms will play hardball with OBSI, too, he suggests, "using delaying tactics, resisting requests, making low-ball offers." Indeed, he warns, if "name and shame" proves ineffective, the whole system will suffer.

Yet, so far, Canadian regulators have yet to address most of the Navigator report's recommendations — although, in mid-November, the Canadian Securities Administrators (CSA) published proposed amendments that would require all firms under its jurisdiction to use OBSI to deal with client complaints.
Currently, only investment dealers and mutual fund dealers are required to use OBSI; other firms do so voluntarily. The CSA's proposed reforms would require exempt-market dealers, education scholarship plan dealers and portfolio managers to use it to resolve their client complaints, too.
To date, this is the only concrete measure the regulators have taken in the wake of the Navigator report. But this test of "name and shame" may now dictate whether they need to go further. IE

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Re: OBSI an industry body trying to help the public?

Postby admin » Sun Dec 02, 2012 10:57 am

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Given some of the abuses suffered by customers of the banking and financial services industry, no person of reasonable intelligence would deny there’s a place for an external body to resolve bank-related disputes.

In 1996 Ottawa set up such a body, the Ombudsman for Banking Services, to perform such a task, a task undertaken after the client and an institution have tried but failed to reach a satisfactory result.

Over time, OBSI, home to about 600 participating organizations, has resolved hundreds of matters even if a common criticism is that it takes too long to do the work and get a resolution.

Another criticism is that once a resolution is reached, it amounts to little more than recommendations, meaning OBSI, just like the guy with a knife at a gun fight, is essentially powerless to collect for the client. Over time, that lack of power has emerged as a structural flaw in the system, leaving some to conclude OBSI was set up to fail, or at least not be very effective. While OBSI is not a regulator, a reasonable person would argue it needs to armed to have a chance. (That lack of real power occurs at some financial regulatory bodies which have no ability to collect penalties from people who have committed transgressions while working in the industry but are now outside the industry.)

Accordingly, to make good on its recommendations, OBSI needs something more than the ability to “name and shame” the offending institution: some institutions are prepared to take the reputational risk because they feel the process is unfair as is the way restitution is calculated.

That lack of concern about reputational risk has been in evidence on three recent occasions. The latest played out Friday when OBSI named Macquarie Private Wealth as refusing compensation recommendations it made on two investigations: one for $74,791 (that covered matters from June 2005 to June 2008) and the other for $157,274 (that covered the period Sept. 2000 to April 2009.) Macquarie objected:



• Over the periods for the investigations, Macquarie did not have an operation in Canada. It came here in 2010 when it acquired the former Blackmont Capital. Macquarie bought that firm from CI Financial which had acquired Blackmont a few years earlier. The base for all these acquisitions was the retail arm of Yorkton Securities.

• It had nothing to do with the matters under investigation (which were filed in early 2010) because the brokers in question never worked for Macquarie and the affected clients were never clients of Macquarie. OBSI disagreed, saying “throughout the relevant time period, the investment dealer remained the same and the responsibility to compensate the customers rests with the investment dealer; merely the name changed.”

• Macquarie argues that when it bought Blackmont, it didn’t sign a blank cheque for all the liabilities. Instead it worked out a deal, indeed its the standard practice, whereby CI would indemnify Macquarie for certain matters, including claims brought against former employees. Accordingly Macquarie argued OBSI should go and talk to CI first and get them to pay up. It’s understood CI also objected in part because of the way the restitution formula is determined.

• The way the restitution formula is calculated. Macquarie argues the amount recommended bears little relationship to the capital loss incurred from the inappropriate advice.

OBSI said Friday ”we believe the clients were owed compensation but Macquarie refused to pay. The bulk of our investigations get resolved fairly,” adding that settlements have been reached since “name and shame” was implemented.

http://business.financialpost.com/2012/ ... nizations/
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