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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 » Fri Feb 24, 2012 12:26 am

To: OSC Investor Advisory Panel c/o Anita I. Anand Associate Professor Faculty of Law
University of Toronto 78 Queen’s Park, Suite 301 Toronto, ON M5S 2C5

February 1, 2012

Dear Mr. Wetston:

The Investor Advisory Panel of the Ontario Securities Commission appreciates the opportunity to comment on external dispute resolution services in Canada, including developments with the Ombudsman for Banking Services and Investment (OBSI). By way of background, the IAP is an independent body that was appointed by the Ontario Securities Commission in August, 2010. We are charged with representing the views of investors and providing input on the Commission’s policy initiatives, including proposed rules and policies, the annual Statement of Priorities, concept papers and other issues.


Maintaining and building trust between consumers and financial services companies should be a central goal of Canadian regulatory and governmental policy – a goal endorsed by the G20 meeting of world leaders in February, 2011.1 How the industry handles consumer complaints is an essential component of that trust. However, knowing where to turn with complaints and navigating the bureaucracies of large financial institutions can be overwhelming for many consumers and small businesses.
The Investor Advisory Panel believes wholeheartedly in the importance of an independent, impartial, and financially accessible body that provides Canadians with an effective way to resolve disputes with banks and financial institutions. We believe in a process that facilitates financial redress for consumers. Formal legal proceedings are often not a viable alternative because they are costly, complex, and not readily accessible to most Canadians for disputes of this kind.


Our recommendations are as follows:

First, we call on the Ontario Securities Commission as an important member of the Joint Forum of Financial Market Regulators to push for broader and more robust protection for consumers and investors.

Second, such protection should include a statutory fiduciary obligation for all advice-based financial service providers. If strong regulation exists ex ante, the likelihood of disputes arising ex post presumably decreases.

Third, a truly independent, objective, accessible and effective external dispute resolution (EDR) regime is likewise an integral component of investor protection. To be effective and to avoid the conflicts of the past several years, such a dispute resolution regime cannot rely on the voluntary participation of banks and other financial institutions. Participation in an independent, universal EDR service should be a legal requirement for all firms in the financial services industry. The decisions of this body should be binding on all participants with limited rights of appeal to an independent tribunal supervised by the regulators and it should have the statutory authority and resources required to provide timely, effective and impartial decisions to Canadians. Such a regime would bring Canada to the standard now implemented in other common law countries including the United Kingdom, Australia and New Zealand.

Accordingly, we believe that the Joint Forum of Financial Market Regulators which oversees OBSI should seek to prevent further departures of participating firms from OBSI and endorse the decisions of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA) to require participation in OBSI. We support compulsory participation in OBSI by all banks and financial services providers, including the two banks that have recently departed. (TD, RBC)

The interests of Canadian consumers, including the cultivation of public trust in the domestic financial services industry, are not served by the increasing fragmentation of ombuds services for consumer financial complaints. No party in a dispute, including banks and other financial institutions, should have the right to choose its own adjudicator, particularly when those adjudicators are private, for-profit providers.

Such a system has an inherent lack of independence. A profit-seeking dispute resolution service chosen by and paid for by the banks cannot be impartial and independent.

Fourth, we call for a simple, accessible, and universal EDR service for all consumer financial and investment complaints in Canada. The scope of this service should not be constrained by sector or product type, but should encompass complaints relating to segregated (insurance) funds, and limited and exempt market dealers as well as banks and all financial institutions. Canadians should not be subject to different levels of protection and compensation depending on who sold them their investment. As an interim step, the separate insurance and investment dispute resolution bodies should at least share a common discovery process, so that consumers do not have to “learn” multiple systems in order to have their complaints adequately addressed.

Placing Industry Complaints in Context

Over the past three years, two major banks have withdrawn from OBSI, and several members of IIROC have attempted to do so.5 The extent and merit of the industry’s criticism have been challenged:

The independent review of OBSI’s activities published in 2011 (The Navigator Report)6 concluded that the industry’s complaints lacked substance. The Navigator report also established that the industry wins 69% of the complaints referred to OBSI, compared to the average of 50% in other common law jurisdictions.

Total compensation paid to consumers by financial institutions on 255 closed cases under OBSI mediation was $3.8 million in 2010.8 Of this amount, banking services customers received average compensation of $5,676 per settled complaint, with a median of $2,000, and investment services customers received average compensation of $19,121 per settled complaint, with a median of $8.205.9
In concordance with the Navigator Report’s findings,10 we do not think that OBSI membership imposes an unduly costly or onerous burden on the financial industry.

Fiduciary Requirement, Universal External Dispute Resolution

A legally explicit fiduciary duty for financial advisors would improve Canadians’ trust in the financial system and may reduce the volume and severity of complaints, in our view. Industry objections regarding Know Your Client forms, client risk tolerance, client knowledge and responsibility for investment decisions would lose force. Indeed, the Investor Advisory Panel’s own consumer research11 demonstrates that investors believe that such a fiduciary duty already exists. This false belief may contribute to the existing volume investor complaints, i.e., if investors place undue trust in their advisors on this basis, and this trust is broken, they rightly believe that they should have some recourse.
Certain financial services firms12 have criticized OBSI for disregarding or not adequately accounting for clients’ contribution to their own misfortune, i.e., through investor ratification or the failure to mitigate investment losses. The protection of investors and consumers in financial markets has long supplanted the raw idea of caveat emptor as it should in this case. The introduction of an explicit fiduciary duty would clarify the advisor-client relationship, further protect consumers and likely reduce the frequency and severity of complaints. It is long overdue.


The existing system is confusing for Canadian financial consumers. Many Canadians are unaware of OBSI’s services and powers. They lack clarity regarding which disputes should be addressed to the OBSI and the circumstances which entitle them to refer their complaints to it. The present and further fragmentation of EDR services in Canada is a regressive step in consumer financial protection. The implementation of a truly national and universal EDR service for all investor complaints would address these issues. The office should include as members dealers of segregated (insurance) funds as well as limited and exempt market dealers in order to simplify access to dispute resolution services for Canadian investors.
Once again, we appreciate the opportunity to comment on this important matter. We feel strongly about these issues. Please contact us if you wish to discuss the matter further which we would be pleased to do.
Yours very truly,
The Investor Advisory Panel Anita Anand, Nancy Averill, Paul Bates, Stan Buell, Lincoln Caylor, Steve Garmaise, Michael Wissell
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Feb 23, 2012 2:40 pm

Wednesday, 22 February 2012
Judge Lays Out Limitations of OBSI
A judge would be considered by most an expert in justice and an impartial observer of the conditions that lead to justice. It is thus worth noting the recent comments of Judge Bryan Shaughnessy of the Ontario Superior Court regarding the Ombudsman for Banking Services and Investments (OBSI). Though his comments are made only in relation to whether the OBSI would be a suitable body for resolving a class action in the case before him, I think his list applies in general to OBSI as a means for investors to get justice.

Here are the defects and limitations Judge Shaughnessy lays out:
the OBSI invites participation by firms but cannot compel cooperation
the OBSI can make a recommendation but it cannot compel a firm to make the payment recommended
the only remedy for non cooperation by the firm and/or not following the recommendation is the "rather anaemic remedy" of publishing the name of the firm and details of the refusal
the enforcement procedure is not binding on the firm; this amounts to "... a denial of access to justice" for investors
the OBSI can only handle complaints for amounts up to $350,000 unless the parties agree
claims for punitive damages are not an explicit option under OBSI; I would guess this is what the Judge is thinking about when he says later that behaviour modification "... does not appear to be the objective or mandate of the OBSI process".
"The appearance of impartiality and independence of the OBSI is to some extent in play. ... [since] the ombudsman's recommendation is not binding on the Participating Firm or the Complainant. A truly impartial and independent body would have control over its process."
the OBSI dispute process is sparsely defined
there is no hearing process for complainants to introduce evidence or make submissions and there is little or no chance for investor participation
the OBSI is not bound by rules of evidence
the procedure by which recommendations are arrived at does not lead to a record of how the OBSI's recommendation is calculated
So there we have it, a checklist for reforming and strengthening OBSI.

Don't get me wrong. OBSI, even with its deficiencies, has been doing valuable work for investors. It does, however, need a counter to the industry offensive to shun it, no doubt spurred by too many cases where OBSI has taken the investor's side. As the saying goes, the best defense is a good offense. Let's reform OBSI and make it a body with sharp teeth and power. Go to it politicians.

Thanks to Ken Kivenko of [url]CanadianFundWatch.com[/url] for the heads-up on this court case (the details of which seem to show some odious, abusive practices involving mutual funds, financial "advisors" and inappropriate leveraging advice). Ken's website also has a very practical (and sobering) investor guide to dealing with the OBSI. The pdf judgment from which I extracted the Judge's ideas is linked to on this page of the website of Thomson Rogers, one of the law firms in the case.
http://canadianfinancialdiy.blogspot.co ... -obsi.html
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Feb 16, 2012 8:25 pm

images.jpeg (13.95 KiB) Viewed 14310 times
I had a conversation with a person going through the OBSI process and I thought I should pass along the highlights, which were shared with me, in case they may be of benefit to other abused investors.

First the background.......an investment victim, a fraud victim, given an industry promise of "trusted professional financial advice", and then delivered the services of a commission sales agent, touting the highest paying (commission paying) products, with the highest fees, lowest performance and some borrowed money (leverage ) thrown in the maximize the payout to the salesperson.

Despite this background, despite the fraud, the misrepresentation, and some of the clearest thinking and presentation of of the facts that I have witnessed yet........the feedback from OBSI sounded like this:

"IIROC regulations are not sufficiently clear to allow us to ..........."

"unless we can "convince" the firm that they did wrong............."

I won't go on and on, except to say that I have very little direct experience with OBSI, but I do not have to be told very much to imagine them being impotent and self protective, rather than client protective To add further to their vulnerability, they are at this moment, being "fired" by some (TD and RBC) banks who do not like OBSI's brand of dispute resolution, and prefer to hire their "own".

OBSI is living up to the image of an agency with no teeth, no balls, and no desire to do investor protection, but a huge need to work on agency protection. Sorry OBSI if I am being overly harsh, but your PR has been as invisible as the BC Sasquatch.....

SO another of the 120 plus agencies, departments, offices, associations, regulators and self regulators, all apparently either captured, or in the process of being captured (or marginalized) by a financial industry "too big to prosecute".

Buyer beware my fellow Canadians, now more than ever before. buyer beware even if they give you promises of "trusted professionals."

Fraud pays in Canada.
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Feb 16, 2012 10:56 am

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HELP WANTED: New chair for OBSI
Theresa Tedesco Feb 16, 2012 – 7:00 AM ET | Last Updated: Feb 15, 2012 5:10 PM ET

The embattled Ombudsman for Banking Services and Investments (OBSI) is looking for a new chairman as part of a “broad-based” reform of its governance structure.

The not-for-profit mediator of last resort, which has been under fire from Canada’s major banks and their investment dealers, is currently canvasing for an independent chair to replace Dr. Peggy-Anne Brown. A special governance committee of OBSI’s 11-member board of directors, which was created to oversee the overhaul, is in charge of the search.

The changes, which were among key recommendations made by an independent evaluator from Australia last November, are expected to be completed in time to replace several long-serving independent directors, including Dr. Brown, who will step down in September, at OBSI’s annual general meeting.

Created in 1996 to review complaints by small businesses against chartered banks, OBSI is the only national independent dispute resolution provider in the financial services industry. Its mandate expanded in the past decade to cover all unresolved grievances.
As arbitrator of last resort, OBSI resolves disputes between the 600 participating banks and investment firms and their customers if an agreement can’t be reached between them.

However, while the major banks and credit unions participate on a voluntary basis, the investment industry-brokerages, and mutual fund companies joined OBSI on a mandatory basis in 2002 as required by the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Funds Dealers Association of Canada (MFDA).

But there has been tension building between the industry and OBSI in recent years. Troubled by the growing number of consumer complaints filed against them, the length of time to resolve the disputes and the steadily increasing damages being awarded to clients, investment dealers are demanding changes to OBSI’s governance structure to make it more transparent and accountable.

Last year, RBC Capital Markets Ltd., TD Waterhouse and Manulife Financial Corp. filed an application with IIROC, the national self-regulator overseeing investment dealers and equity trading, for an exemption from the mandatory provision that requires them to resolve disputes through OBSI.

That application was denied by IIROC and the MFDA in May, 2011. Since then, securities regulators and the industry have been trying to resolve their differences over OBSI.
While that was happening, TD announced last November that it would cease using OBSI to mediate disputes with its bank customers.

The departure marked the second time a major Canadian bank has relocated its dispute resolution business away from OBSI in favour of a for-profit mediator. Royal Bank of Canada was the first when it quit using OBSI for its banking disputes more than three years ago.

As a result, numerous shareholder advoate groups and OBSI’s 11-member board of directors have asked Canadian financial services regulators to force the banks to support the not-for-profit mediator of last resort through “mandatory participation.” So far, Finance Minister Jim Flaherty has not indicated what, if anything, the government will do.
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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Jan 30, 2012 3:12 pm

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All-public panels are a hit with investors, Finra says
Popularity of new program could quell calls to end mandatory arbitration

By Dan Jamieson
January 29, 2012 6:01 am ET
After nearly a full year, the Financial Industry Regulatory Authority Inc.'s program to let investor plaintiffs exclude industry arbitrators from hearing panels has proved more popular than expected.

So popular is the program, in fact, that it could ease concerns about industry bias and help quell calls to end mandatory arbitration.

From the start of the all-public program in February 2011 through Jan. 26, more than three-quarters (76%) of investors chose the all-public option, which allows them to strike industry arbitrators from proposed lists of panelists.

That figure was up from a 54% opt-in rate during a 27-month pilot program, according to Finra.

Normally, investor cases are heard by three-person panels that include an “industry” arbitrator who works in or is associated with the financial industry.


The popularity of the all-public program is a “bit surprising, because the pilot numbers were lower,” said Linda Fienberg, head of Finra's arbitration program.

Observers said a growing familiarity with the all-public option by plaintiff's attorneys is driving its widespread use.

The pilot also was limited to customer cases against a select group of firms and applied only to those cases where an individual broker was not named. The permanent program includes all firms, as well as cases against brokers.

“The program has given everyone an option” to use in a larger number of cases, said Ryan Bakhtiari, a partner at Aidikoff Uhl & Bakhtiari, and president of the Public Investors Arbitration Bar Association, which represents plaintiff's attorneys.

The Securities Industry and Financial Markets Association also supports the program.

“We also think it's quite important that an industry panelist remains an option for investors,” Kevin Carroll, associate general counsel at the trade group, wrote in an e-mail.

SIFMA was smart to support all-public panels, said David Robbins, a plaintiff's lawyer and partner at Kaufmann Gildin Robbins & Oppenheim LLP.

The program has eased concerns about industry bias and helped counter the push by the plaintiff's bar and state regulators to end mandatory arbitration, he said.

“Finra had to respond this way because ... they were fearful they would be out of [the arbitration] business,” Mr. Robbins said.

Finra “wanted to assuage customer's attorneys [about the process] and it's worked,” he said.


“I do believe this [program] has removed the one issue [critics] could use to claim the [Finra arbitration] forum wasn't as fair as it might be,” Ms. Fienberg said.

Data from the pilot program are inconclusive as to whether investors did better when they opted into the program.

Of 49 pilot program awards issued by all-public panels, investors were awarded damages in 26 of 40 cases, or 65% of the time, according to Finra. Another 23 pilot program awards were issued by panels with one nonpublic arbitrator, and in these instances, investors got relief 13 times, for a 62% win rate.

In nonpilot cases, win rates were lower: In 2009, arbitrators awarded damages to investors in 49% of cases; in 2010, the win rate was 48%.

However, Finra said that the award data are insufficient to draw meaningful conclusions about whether all-public panels tend to favor investors — a conclusion that others share.

“Talk to me in a year” about win rate data, Ms. Fienberg said.

“We'll have a better idea then” whether customers do better with all-public panels, she said.

The growing use of the all-public option has worried some industry arbitrators, who insist that they can be as tough, if not tougher, on industry malefactors as public panelists.

“I've noticed inquiries for me [to sit on panels] have dried up,” said Neal Tourdo, national sales director at Mastrapasqua Asset Management Inc., who serves as an industry arbitrator.

Eliminating industry panelists “is a mistake,” he said.

“Finra doesn't do a good job of educating [public] arbitrators about investments,” Mr. Tourdo said.

For more technical products, such as derivatives, “the public arbitrators are generally unprepared,” said Joseph Stineman, a partner and chief compliance officer at Fogel Neale Partners LLC, who is also an industry arbitrator.

He added, however, that his own caseload of four potential customer cases is heavier than ever.

Of the 1,431 cases in the permanent program that have ranked panelists, investors have chosen to strike all the industry people in 66% of the cases, according to Finra.

Despite the success of the all-public option, the plaintiff's bar and state regulators still want an end to mandatory pre-dispute arbitration agreements.

“We think choice is working with the all-public program, and we think choice is the way to go in arbitration” overall, Mr. Bakhtiari said.

If arbitration were made optional, “I think [the industry] would improve the customer protection aspect of it,” such as providing for attorney's fees and written decisions, said John Cronin, Vermont's securities director and chairman of the North American Securities Administrators Association Inc.'s broker-dealer section.

The Dodd-Frank reform law gave the Securities and Exchange Commission authority to prohibit mandatory arbitration in brokerage contracts.

The commission hasn't yet acted on that authority.


Mr. Robbins doesn't think that will happen, due in large part to the all-public option.

Customers “are winning” in Finra arbitrations, he said.

“Why kill a system where you can prevail?” Mr. Robbins said.

The SEC doesn't have a timetable for looking into the arbitration issue, Ms. Fienberg said.

“My best guess ... is, they are mightily working to do [other] things with a time requirement first,” she said.

Meanwhile, Republican control of the House and recent Supreme Court decisions make legislation prohibiting mandatory pre-dispute agreements less likely, Ms. Fienberg said.
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Jan 12, 2012 9:55 am

TD Mutual Funds.jpg
TD bank treated clients poorly : When TD Bank pulled out of OBSI at the end of November , a few TD complainants got caught with their complaint in mid stream. TD refused to pay for the continuance of the OBSI investigation. The hapless complainants had to start all over agian with TD's own "independent " Ombudsman ,ADR Chambers. These poor folks suffered as much from this abuse as the original cause of the complaint. To say they are bitter and angry is an understatemnt. Finance Minister Flaherty should mandate that all Canadian Charted Banks be participants in a legislated-enabled and reformed OBSI. OBSI's Board isn't clean either- it didn't have the foresight to anticipate what would happen to its clients if a bank decided to give it the finger. Once again, Main Streett gets the shaft due to complacency, negligence and blatant disregard.

Thanks to Ken at http://www.canadianfundwatch.com for this update

OBSI is the Ombudsman for Banking Services and Investments (OBSI) in Canada, which some banks are shunning so they can hire their own private "referee".
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Re: OBSI an industry body trying to help the public?

Postby admin » Fri Jan 06, 2012 1:33 am

As if it is not enough to be in a self regulating position in the country.............not enough to know that the criminal code rarely gets applied to ones industry indiscretions...........not enough to have near monopoly powers over ones marketplace..........not enough to earn billions in profits often at the expense of fair dealing at times. No, all that advantage is not enough for some.

See which Canadian banks have decided to "opt" themselves out of the official Canadian banking dispute resolution process and hire their "own" ombudsman to resolve complaints against them. http://www.bankingombuds.ca/participating_banks.html
Screen shot 2012-01-06 at 1.24.15 AM.png

Investor warning: If you are going to play in an arena with folks who insist on bringing their own referee to the game, keep in mind that some of the calls may not always be fair. Just sayin...........
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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Jan 02, 2012 3:04 pm

(advocate comments........while Canadian banks scheme behind closed doors to fire the Canadian Banking Ombudsman, and hire their "own" private guns to do this work to their own advantage.......other countries are getting it right. Part of the foundational reason why Canadian financial customers are mostly "fish food" for the big players.)

http://focustaiwan.tw/ShowNews/WebNews_ ... 1201020027

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2012/01/02 15:00
Home > Economy >
New body to mediate disputes between consumers, financial firms
2012/01/02 21:17:28
Taipei, Jan. 2 (CNA) A nonprofit agency that will arbitrate disputes between consumers and financial institutions was formally launched Monday, centralizing a process currently divided between several different organizations.

The body, called the Financial Ombudsman Institution, will hear disputes between consumers and financial services companies such as banks, brokerage houses, and insurance companies and decide on compensation.

"The institution will not only be a consumer protection body, but will serve as a bridge for communications between consumers and financial institutions and make just and professional rulings on disputes between the two parties," said Chen Yuh-chang, chairman of the Financial Supervisory Commission (FSC), which will finance the new body.

Lin Kuo-chuan, chairman of the new institution, said financial institutions must first sign an agreement to state that they are willing to accept the institution's arbitration before cases related to them can be heard.

To get financial institutions to sign the agreement, Lin said it will publish a list of the companies that are unwilling to cooperate.

"Through transparent information, we will let consumers understand which financial institutions are willing to accept arbitration so that they can feel better protected," Lin said.

Lin said that around 1,000 cases had already been transferred to the institution by groups currently involved in arbitration procedures, such as the Bankers Association of the Republic of China and the Taiwan Insurance Institute.

Most of the disputes involve the purchases of structured notes, Lin said.

He predicted that the institution will handle more disputes related to insurance products than to products sold by banks because of the more complicated nature of insurance policies and claims compensation.

According to the institution, it will follow a three-stage arbitration process, starting with face-to-face intermediation, followed by a written assessment, and concluding with the institution's ruling.

As long as the dispute involves compensation of under NT$1 million in an investment dispute and under NT$100,000 in a non-investment dispute, the financial institutions should "accept the result of arbitration" as final,
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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Nov 21, 2011 10:53 am

Letter to Minister Flaherty: Mandate OBSI as the Single Provider of External Dispute Resolutions for All Financial Institutions

FAIR Canada recently wrote an open letter to Minister Flaherty, Canada's Minister of Finance, urging him to designate the Ombudsman for Banking Services and Investments (OBSI) as the approved, sole provider of external dispute resolution (EDR) for financial client complaints and to make the recommendations of OBSI binding. A single dispute resolution service provider is necessary in order to avoid fragmentation, inconsistencies, serious potential conflicts of interest, consumer confusion, and to enable the detection of systemic or widespread issues. It is not in the public interest to permit multiple EDR providers.

The letter to Minister Flaherty reads as follows:

Dear Minister:

Re: FAIR Canada Urges Mandatory Participation in OBSI by the Banking Industry

FAIR Canada supports OBSI as the single dispute resolution provider for clients both of the banking and investment industries. A single independent dispute resolution service provider is essential to ensure the protection of Canadian consumers. One single dispute resolution service provider is necessary in order to avoid fragmentation, inconsistencies, serious potential conflicts of interest, complainant (client) confusion and enable the detection of systemic or widespread issues.

FAIR Canada urges the Minister of Finance, pursuant to the Bank Act and its related regulations, to designate OBSI as the approved, sole body that all financial institutions must participate in in order to deal with client complaints that have not been resolved through internal complaint mechanisms and to make the recommendations of OBSI binding. OBSI remains an essential, simple, inexpensive service for consumers, even though it is a system in which member firms hold a great deal of power, expertise and knowledge. Permitting banks and other member firms to opt out and choose their own external dispute resolution ("EDR") provider, as both the Royal Bank of Canada and, more recently, TD Bank have done in electing to use the for-profit service, ADR Chambers, threatens the existence of OBSI and jeopardizes the fairness and independence enshrined in the current system. It is not in the public interest to permit multiple EDR providers, particularly where the financial institutions choose and compensate private, for-profit providers.

It is important to remember that OBSI is a creation of the banking industry, developed to pre-empt the imposition of a statutory ombudservice. The banking and investment industry is now attacking the entity it created and supported for the level of independence it has achieved and for not being subservient to the industry's interests. OBSI's approach to assessing complaints and its loss calculation methodology is competent, highly consistent and has even been found to be superior (more fair and more accurate) to similar financial ombudservices that are used in comparable jurisdictions.

The financial industry has no real basis for its complaints about OBSI and has refused to enter into a reasonable discussion in order to resolve the impasse. In fact, industry wins 70 percent of all complaints filed by consumers and total compensation paid to customers of some 600 banks and investment firms and mutual fund dealers amounted to only $3.78 million for 2010, with the average amount of compensation being $7,158 per complaint . The dollar amounts are completely insignificant to the banking and investment industries but they are significant for consumers of financial services.

The financial industry benefits from a fair EDR provider (particularly where customers perceive the process to be fair) that is independent of industry. The "Occupy" protests reflect a growing distrust of the current financial system and industry's campaign against OBSI reinforces the negative perception of the financial industry, to which the financial industry should be mindful.

While OBSI has the power to "name and shame" if the firm refuses to accept the complaint resolution recommended by OBSI, OBSI's ability to effectively use this power is reduced substantially when the financial industry bands together and decides to play hard ball. The problem of the "stuck" cases demonstrates the need to put OBSI on a stronger footing.
In a time when Canadians are shouldering more of the responsibility of saving for their own retirement, and during a period of economic uncertainty, it is essential that Canadians have access to a simple, inexpensive, neutral dispute resolution service to resolve their banking and investment complaints. The Expert Panel on Securities Regulation noted the inadequacy of complaint handling and redress mechanisms in Canada. The Chair of the Ontario Securities Commission, Howard Wetston, Q.C., speaking on behalf of the Canadian Securities Administrators (the "CSA") at the OSC Dialogue on November 1, 2011, publically endorsed a single system of external dispute resolution; "The CSA strongly supports the existence of a single system of informal dispute-resolution to which investors can have recourse as an alternative to litigation or binding arbitration."

As the Minister responsible for banking and the champion of a National Securities Regulator, we urge you to act now to prevent industry from retaining multiple providers of EDR services. Put OBSI on a stronger footing through permanent legislative authority on a national level. When a national securities regulator comes into being, a single EDR service should also be mandatory.
Even TD Bank, upon opting out of OBSI, agrees that a reformed OBSI is the answer: "We agree with the regulators that one single, independent dispute service is preferable and that should be OBSI" .

FAIR Canada thus urges you to act now to require mandatory bank participation in OBSI and work to implement the other changes necessary to ensure that OBSI has the ability and resources it needs to continue its work of finding resolutions that are fair and reasonable to both consumers and the financial institutions.

Ermanno Pascutto
Canadian Foundation for Advancement of Investor Rights
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Re: OBSI an industry body pretending to help the public?

Postby admin » Fri Oct 28, 2011 8:40 pm

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For Immediate Release Friday, October 28, 2011

Financial Consumers Need a Fair & Independent Complaint Resolution Process

“We should simplify the redress system for consumers, not allow more fragmentation.”

Toronto, ON—Today, the Board of Directors of the Ombudsman for Banking Services and Investments (OBSI) released the following statement:

In the wake of TD Bank’s withdrawal from OBSI for banking complaints, the Board of Directors would like to strongly express our complete support of and confidence in OBSI management and staff. We are grateful to them for the tireless and often thankless work they do day in and day out to achieve fair outcomes for the most difficult financial consumer complaints.
Canadians are justly proud of our financial services sector. Over the past few years, it has been an example to the world in large measure due to prudent and balanced regulation of the sector, a key element of which is an effective consumer protection framework.

At the heart of that framework is trust; trust between the financial institution and the consumer. How the complaint handling system functions is essential to maintain that trust when the consumer feels he or she has been wronged or treated unfairly. For many individual consumers and small businesses navigating the bureaucratic maze of many large financial institutions can be a daunting prospect and baffling ordeal. When a consumer cannot satisfy his or her complaint with a firm, there must be a fair, impartial and efficient alternative to costly and lengthy legal action.

Canadian consumers and investors deserve an independent, accessible, and effective service that meets the needs of consumers and operates in the public interest. Government needs to know they have an effective partner in dispute resolution, one that independently and credibly deals with consumers and investors, and is transparent and accountable to regulators. For almost 16 years, OBSI has quietly and effectively performed this role.

OBSI’s Board of Directors believes that an effective consumer protection service that operates in the public interest cannot survive without the voluntary support of the banking sector, or in the absence of that voluntary support, mandatory participation through designation under the Bank Act or the approval process contemplated by the anticipated regulations pursuant to Bill C-47.
OBSI engages in extensive discussions and sharing of information with regulators and government. As part of its Framework for Collaboration with financial market regulators, OBSI must also submit to rigorous, independent third-party evaluations on a regular basis, judged against published guidelines on such things as fairness, transparency and accessibility.
OBSI’s Board of Directors believes we should simplify the redress system for consumers, not allow more fragmentation. We are committed to balancing the interests of all stakeholders, including consumers, industry, government and regulators, as we seek a way forward.”
OBSI is the national independent dispute resolution service for consumers and small businesses with a complaint they can't resolve with their banking services or investment firm. As a free alternative to the legal system, we work informally and confidentially to find fair outcomes to disputes about banking and investment products and services.
OBSI looks into complaints about most banking and investment matters including: debit and credit cards; mortgages; stocks, mutual funds, income trusts, bonds and GICs; loans and credit; fraud; investment advice; unauthorized trading; fees and rates; transaction errors; misrepresentation; and accounts sent to collections. Where a complaint has merit, OBSI may recommend compensation up to a maximum of $350,000.
-30- Note: Quotes may be attributed to Dr. Peggy-Anne Brown, Chair.
For more information, contact:
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Re: OBSI an industry body pretending to help the public?

Postby admin » Tue Oct 11, 2011 10:46 am

312673_2370322548056_1550261225_2551821_749935805_n.jpg (25.09 KiB) Viewed 16298 times
from http://canadianfinancialdiy.blogspot.com/

Tuesday, 11 October 2011
Individual Investors Need a Strong Ombudsman
OBSI. It looks like another boring acronym ... until your investment advisor screws up costing you money, refusing to reimburse or compensate you when you complain. Then the OBSI (Ombudsman for Banking Services and Investments) becomes a top of mind way to get redress.

It seems to have been doing too good a job, at least for investors, since the financial industry is now ganging up to undercut, criticise and opt out of OBSI being the one and only dispute resolution body (see various articles in the Financial Post over the last few months).

In fact, far from being watered down the OBSI needs to be protected and strengthened as a recent review commissioned by the OBSI Board suggests in the package of balanced recommendations that meets both consumer and justifiable industry interests. But the industry thinks the report is "delusional" according to a quoted reaction in a Financial Post article by Theresa Tedesco.

The financial industry needs to realize is that in-reality fair, and perceived-by-consumers to be fair, dispute resolution is good for it. One of the lasting psychological effects of the credit crunch is that bankers and investment dealers are a bunch of devious, avaricious crooks (witness the "Occupy" protests), lining their pockets and then letting taxpayers or investors take the fall. The industry's current campaign against OBSI reinforces the negative perception by showing unwillingness to fix errors or misdeeds . As both a shareholder in Canadian financial firms (directly and through ETFs) and an investor / consumer I want to see a fair, balanced system, not one that stacks all the advantages on one side (the FP Tedesco article cited above makes reference to the statistic that industry already wins 70% of cases adjudicated by OBSI - is it only 100% that is acceptable?).

It's not just perception either. When effective penalties are known to occur, firms will tend to improve their internal processes and controls so that problems don't arise in the first place. Industry calls this zero defects or six sigma. Consumers call this peace of mind.

What really needs to happen is for the federal minister of Finance Jim Flaherty to put the OBSI function on a stronger footing through permanent legislative authority on a national level, instead of its present voluntary, industry-funded status and to include insurance in its mandate.
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Re: OBSI an industry body pretending to help the public?

Postby admin » Sun Sep 25, 2011 8:46 am

Financial Post

/story.html> OBSI report widens schism

Theresa Tedesco, Financial Post * Sept. 24, 2011

If the Australian author of the report on the state of Canada's national
ombudsman for banking and investments thought his bluntly worded 94-page
review would silence the criticisms against the organization that hired him,
he's mistaken.

Phil Khoury's dismissal of the complaints levelled against the Ombudsman for
Banking Services and Investments (OBSI) by many of its largest members as
"somewhat baffling" has been met with derision.

"It's a complete delusional whitewash," said a source involved with the
complaints filed by some of Canada's largest brokerage and mutual fund
firms. "It's not going to have any resonance with the industry because it
has no credibility and no integrity."

In a report tabled Wednesday, Khoury, a director of consulting firm
Navigator Co. and a former Australian securities regulator, found there was
"no substantive basis" for the months of hyperventilating by TD Waterhouse,
RBC Capital Inc., Manulife Corp., Investors Group Inc. and others against

Khoury, who was hired by OBSI [ actually by the Board] to conduct the external review (mandated by
regulators), praises the mediator of last resort and repeatedly suggests
that while only minor tinkering is actually required to improve the
beleaguered agency, only a massive overhaul will slake the thirst of the
industry barbarians at the gate.

"We do not believe that the current impasse between industry and OBSI can be
resolved in any sustainable way with only minor refinements," he wrote. "The
situation has moved beyond that. We argue the resolution of the current
impasse will require the active intervention of the regulators and a
multifaceted package of reforms designed to act as a 'circuit breaker'. "

Khoury is right about the overhaul, but not necessarily for the reasons he

The not-for-profit organization is the only consumer friendly
dispute-resolution service available in Canada to the customers of the 600
participating banks and investment firms. If folks don't agree with their
banks or brokers on how to resolve a problem, they usually wind up at OBSI.

The investment industry has fumed that the way OBSI calculates losses is
inconsistent and too one-sided in favour of dissatisfied clients.

But their main objection is about what they believe is a lack of integrity
in the process because OBSI is not accountable and has no oversight from

Meanwhile, consumer-advocate groups that have expressed similar complaints
about OBSI's governance - and still do privately - have rallied around the
mediator, preferring to keep the devil they know rather than risking the

FAIR Canada applauded Khoury's report as "tactfully worded." Ermanno
Pascutto, the advocacy group's executive director, says he didn't find
anything in Khoury's report to quibble about.

"From the outset, we've been absolutely perplexed by the hostile efforts to
weaken and ultimately destroy OBSI," he said. And Mr. Pascutto, who is a
member of OBSI's consumer advisory panel, says he's at a loss to explain why
the industry, which wins about 70% of the cases brought before OBSI, is
whining about having to pay out $3.8-million in awards in 2010 to
disgruntled customers.

Even the fact that three of Khoury's eight recommendations involve
overhauling OBSI's board of directors and improving the agency's overall
governance - issues at the heart of the industry's grievances - fails, at
least initially, to bridge the divide.

Worse, by demonizing the banks, brokerages and mutual-fund firms as fat cats
who refuse to pay aggrieved customers, Khoury has merely widened the chasm.

The report appears to have entrenched the Street's view that OBSI is out of
touch with reality, and inflexible to its concerns.

Consequently, expect more financial firms to dig in their heels by refusing
to act on OBSI's decisions and delaying the resolution process even further.
How is that good for consumers?

Perhaps now would be a good time for the self-regulatory bodies that oversee
the financial firms, and Canada's senior securities regulators, to step into
the bitter fray that, for the most part, they have avoided.
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Re: OBSI an industry body pretending to help the public?

Postby admin » Tue Sep 13, 2011 10:38 am

IE's James Langton gives his take on dealer attacks on OBSI : http://www.investmentexecutive.com/clie ... ilNews.asp

"...Although the starkly different
positions of the sector and investor advocates are understandable, the spat itself seems unnecessary.
For all of the grumbling from the sector, the
[ ombudsman ]
service it’s picking such a nasty fight with
is not only its own creation but the impact by OBSI on the sector is much more benign than the
hyperbole would seem to indicate. Some of the criticism portrays OBSI as a powerful force that is
enabling clients to take advantage of the sector, soaking it for unwarranted compensation, but the
evidence suggests otherwise. In fact, the securities sector still wins the majority of cases that come
before OBSI. About two-thirds of the time, complaining clients are sent home empty-handed
. In cases
in which OBSI does rule in favour of the client, the amounts involved are simply tiny: for 2010, for
example, OBSI recommended total compensation to investment-sector clients of less than $3.4 million.
For the sector overall, that’s a rounding error.

Firms win before OBSI more than they lose; if they choose to follow its recommendations, the amounts
they (or their insurers) must pay out are inconsequential. Moreover, criticizing OBSI undermines the
good the sector has done itself by setting up the service. The exercise wasn’t entirely voluntary — OBSI
was created when the sector was under the threat of the federal government forming an industry
ombudservice. Nevertheless, the creation of a fairly simple, cost-effective alternative to litigation was
good for clients — and for firms. As the PIAC points out, without OBSI, firms “could be facing much
more substantial awards and a tidal wave of civil litigation,” adding that OBSI’s service benefits the
sector by reducing costs while providing fair and efficient redress for investors. .."
http://www.investmentexecutive.com/clie ... ilNews.asp
SIPA have proposed that Canada enable OBSI via
legislation as is the case in the UK, Australia and NZ. We agree.

(advocate comments.......pathalogical banks appear to be fighting over principle and not money.......the money involved is tiny, but the principle of giving fair and honest settlements for financial violence done by the banks is a principle they will fight to the end to NOT HAVE to pay)
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Re: OBSI an industry body pretending to help the public?

Postby admin » Tue Aug 09, 2011 11:25 pm

Tuesday, August 9, 2011

NEWSFLASH OBSI In Critical Condition
Canada: Banks Stomp OBSI to Near Death

“In a shocking news development, we get word that a gang of extremely large, powerful and petulant banks have stomped the current Ombudsman for Investments to near death”!

In investigating the disturbing allegations we, like most Canadians, are confused as to why such large and powerful beasts would suddenly turn on such a small, frail, and youthful position.

For those requiring more background, the OBSI is the “ombudsman for banking services and investments”. This position was formed in the late 1990s when rumours were heard about a rampaging group of banks beating up small business owners and stealing their lunch money. No charges were laid as the surviving small business owners were hesitant to risk future lunch money. In 2002 the OBSI added the investment industry to its mandate; attempting to provide fair resolution to small retail investors who wondered how their current lunch money and future lunch reserves (RRSPs) had seemingly disappeared from their investment accounts. Of course many of these nest eggs were “prudently” invested by the gorillas in the Investment industry including of course the bank gang.

Many speculate that adding the investment bullies to the mandate of the ombudsman was short-sighted. Like a British police constable, the ombudsman carries no weapons when confronting these wild marauding gangs. Apparently the governments of the day felt that moral suasion and a proper upbringing would keep the gangs in line. Unfortunately, it would appear that power and greed have tilted the scale away from any fear of public condemnation. The large powerful bank investment firms appear to actually believe that whatever they do is always correct and any opposition is to be immediately crushed!

In fairness, it appears that the ombudsman did not even get his weapon (public disclosure) out of his holster before he was set upon. Despite clear warnings of the dangers, the ombudsman actually thought he was a respected friend of the gangs and appears to have walked into the back alley willingly and without back-up. One can only wonder at his surprise when the organized criticisms began raining down on his unprotected skull. Early word from investor advocates familiar with the case is that the ombudsman was guilty of having his own opinion on both the veracity of the banks documents and the claims made by the banks commissioned sales forces. Indeed, some have actually charged the ombudsman with talking to investors who lost their savings and in several radical cases, believing the word of a lowly common client over that of the banks commissioned sales person.

Medical staff tells us it will be some time before we know if the ombudsman will survive his injuries. While the powerless neighbourhood watch (investor advocates) keep a vigil at the hospital bedside of the ombudsman; the power, wealth and sheer overpowering influence of the gangs continues to threaten any recovery. Amid rumours that the gangs are looking at appointing their own “gang controlled” ombudsman to fill the void they are attempting to create; government and regulatory officials appear to be keeping a very low profile. Apparently the gang is so powerful even the government is leery of challenging their tantrum.

Back to you in the mainstream media for our next follow up on this troubling story......


Posted by Mike Macdonald at 2:53 PM
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Re: OBSI an industry body pretending to help the public?

Postby admin » Tue Aug 09, 2011 11:21 pm

(Banks are not interested in fair play and honest dealing with customer abuse complaints............read on)
OBSI under savage attack

On Thursday May 12th officials from RBC Capital Markets Ltd., TD Securities and Manulife Financial Corp. met with securities watchdogs and industry self-regulating agencies to argue for changes to the way brokerage firms are forced to resolve disputes with their aggrieved customers. The meeting has took place at the offices of the Ontario Securities Commission, , in the wake of an unsuccessful attempt by RBC, TD and Manulife to pull out of a mandatory provision that requires brokerage firms to mediate through the Ombudsman for Banking Services and Investments (OBSI).Investor groups were not invited to the meeting. Instead of telling the dealers to show cause and support their allegations,/arguments , for OBSI was pressured to establish a consultation and put its loss calculation methodology on trial. We have asked for a copy of the minutes via Freedom of Information.

The consultation period ended July 25th with a unusual number of investor submissions. Comment Letters from industry were hostile and raised serious issues about how fair dealers are treating complainants . We have analyzed the industry responses. A copy of our report is available from kenkiv@sympatico.ca So in the dark is the IIAC about the role of an Ombudsman they actually said: “One matter that the paper does not address is what happens when the firm and OBSI staff have a differing opinion on the outcome of an investigation. While the Terms of Reference indicate that if the firm does not comply with the compensation recommendation, the details of the dispute will be published, this is an extraordinary remedy that loses its effectiveness if used too often over time. We recommend creating other options, such as formal mediation, that would assist in reaching balanced outcomes. [ http://www.obsi.ca/images/document/IIAC ... 5_2011.pdf ]” In other words , after the dealer has rejected restitution, OBSI has recommended restitution , a mediator should be called in! Of course this would add still more time for the complainant waiting for an answer and would defeat the whole purpose of an Ombuds service.

IIAC also stated in their Comment Letter: “ We also seek clarification on the stated principle in the Consultation Paper that disclosure does not validate an unsuitable recommendation. It should be clear that,although such disclosure may not make the investment suitable, if full disclosure is followed by informed client consent and direction to make the investment, the client must bear responsibility for losses relating to that investment.” We won't even bother to remark on this absurdity.

This problem had been brewing for some time . At the Feb. 23rd OBSI board meeting , Ombudsman Doug Melville painted a grim picture :”Mr. Melville stated that, while he did not want to overstate the issue, OBSI is experiencing a concerning escalation of minor conflicts with investment firms around matters that previously were not a material concern and this affects OBSI’s front-end process. These include:
- refusal to sign consent agreements or requests for changes to longstanding consent agreement;
- pre-emptive challenges to OBSI’s mandate with respect to specific case files before OBSI staff have had an opportunity to review the case for mandate;
- refusal to sign the tolling agreement by firms not covered by the blanket tolling agreement covering most bank-owned financial groups;
- refusal to provide or very slow to provide requested file information upon OBSI request;
- increasing proportion of case files already under investigation or in the final stage of settlement are being escalated to OBSI senior management based on methodology used (particularly loss calculation and apportionment) and judgment with respect to application of fairness considerations to the facts of a specific case.”

During this period , at least 15 complainants have been denied restitution recommended by OBSI. because the dealers have rejected OBSI's recommendations. For whatever reasons, the OBSI board has decided not to make public the names or case details of the refuseniks. It was bad enough being financially assaulted but now the complaint process itself is taking a heavy toll amongst investors. There is no end in sight to this fiasco as cases no doubt are piling up.OBSI has been permantently mpaired and staff are demorized. Shame on the OBSI Board of Directors ,the CSA and Bay Street for putting complainants through financial and emotional distress.

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