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 » Mon Jan 27, 2020 3:49 pm

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Breach of Trust by Public Officer, Section 122, Criminal Code

This came to my email today:

“..... I want to alert you to a few things about OBSI that are of concern .

First off, they've gone silent on lowball deals whererin retail investors are screwed over by seducing them into accepting a level of compensation less than what OBSI thought fair and reasonable .Why are they so opaque in disclosure. Are they embarrassed at the results?

Second, a fellow named Peter Whitehouse has issued a well researched report that exposes the revolving door syndrome at OBSI and their Participating Firm staff. Very bad optics as a minimum.

This same gentleman has also provided a link where OBSI is looking for a complaint investigator but asks for the job applicants to send their applications to the banking industry lobbyist , the Canadian Bankers Association!! Can you imagine how many fine investigators the CBA would weed out with the ass-backward process? What other connections do they have with the CBA? .

And third there is the recent move into the same building as hosts the Ont. Sec. Commission ( the Chair of the JRC is with the OSC) , a few Bay Street law firms and some industry participants . How does this create a perception of independence? See this guideline from the Joint Forum paper The Financial Services OmbudsNetwork – A Framework for Collaboration August 10, 2007 https://www.jointforum.ca/en/init/fson_ ... ion-en.pdf

"INDEPENDENCE GUIDELINES For purposes of this Guideline, “independence” means the absence of relationships with the affected financial sector industry, or firms within it, which would cause a reasonable person to question whether the person can fairly and effectively resolve complaints (in the case of officers, staff or any person engaged by the OmbudService to deal with consumer complaints) or provide objective and disinterested oversight (in the case of directors). " By moving physically closer to their Participating Firms and their overseer, only a fool would think that a reasonable person sees this as a positive. They will meet in elevators, in restaurants , for coffee breaks so cozy relationships will build. I think I'm a reasonable person but my perception of this move is certainly not positive .Why not share offices with the IIAC?- that would put them in even closer proximity with Participating Firms..Maybe they need some real battle-tested consumer advocates on their Board of Directors to explain things to them?( The British and Irish Ombudsman states that The Ombudsman must be visibly and demonstrably independent from those whom the Ombudsman has the power to investigate) .

Given the above, it should not be surprising that responders to a user satisfaction survey( 2018 Annual Report) stated that just 29% were either very satisfied or somewhat satisfied with the outcome of their case - 71% reported not being satisfied with their case outcome. In response to the question " How well did OBSI staff understand your complaint " , 48% answered adequate or worse ( 14% said very poorly). Do you see how all the dots are connected?"

Again, the thing that comes to mind is Breach of the Public Trust, sec 122 Criminal Code of Canada, and wondering when all is said and done if the world will demand “financial crime trials” for the guilty...

https://laws-lois.justice.gc.ca/eng/act ... n-122.html
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Re: OBSI an industry body trying to help the public?

Postby admin » Sat Jan 25, 2020 4:16 pm

Bank And Investment Ombudsman Quid Pro Quo's


OBSI job applicants submit resumes to the CANADIAN BANKERS ASSOCAITION?

It is no longer a stretch to say that OBSI is yet another Canadian financial fraud perpetrated upon Canadians. I was sent this information from someone who has dealt unsuccessfully with OBSI, Canada's official Ombudsman for Banking Services and Investments. I know of too many victims of investment abuses, who received the “facade” services of OBSI. It was the saddest thing to watch Canadians be cheated and abused a second time, first by the bank investment dealers, and second by this “artifice” ombudsman, OBSI.

OBSI advertises a mandate to protect consumers and to inspire confidence in Canada's Financial Services Sector.

They fail to point out that one of their well kept secrets is that OBSI selects its workers by vetting applicants through the Canadian Bankers Association. That would be like letting jury selection go through OJ Simpson...

NOW it all makes sense why the public results of OBSI appear to be the exact opposite of the stated intent of OBSI. It is an industry “insulator”, not a public protector.

They are yet another industry "insulator", a tainted regulator dressed in the disguise of public protection. The list is now too long to include here. Investors Beware!

Sent to me from a victim today:

Can you believe this OBSI directive ?

Please see the bottom of the linked OBSI announcement of how to apply for an Investigator position with the OBSI.

You might want to make some enquiries of the OBSI Chairman for clarification as to why the Canadian Bankers Association (CBA) were used as the recruiting agent for the "independent" and "impartial" OBSI !

This could explain why, in the past, there have been so many financial services (née banking) ex-employees who have chartered their career paths through the "Revolving Door Syndrome" to and from the OBSI.

This is not idle speculation. The indisputable facts that questions the OBSI past attraction for the said employees and those employees using their past-employment leverage for their own self-enrichment is clearly spelled out in the attached "The Revolving Door Syndrome" presentation.

How are the Regulators going to neutralize this situation that improves the basic principles of balance to be more in favour of Complainants ?

To see a PDF copy of the OBSI call for applications for a senior investigator, with resumes to be submitted to the Canadian Bankers Association, visit:

https://www.obsi.ca/en/about-us/resourc ... 2_2018.pdf

and when that link is taken down out of embarasssement, see copy at the following link:

https://www.unpublishedottawa.com/lette ... d-pro-quos

Please share this to protect friends and family from financial abuse by financial professionals acting in organized gang-like criminality.

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

Postby admin » Thu Dec 05, 2019 2:29 pm

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OBSI may have begun with the best of intentions, however they now appear to be yet another captured body that is more part of the problem, than solution. It simply does not take the Canadian financial industry long to capture any entity that affects profits in the billions.

Taking away OBSI’s ability to even touch upon systemic issues was one very clear example of the capture, or the crippling of effectiveness, and it occurred years ago now at OBSI.
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Re: OBSI an industry body trying to help the public?

Postby admin » Sat Nov 16, 2019 10:58 am

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https://www.investmentexecutive.com/new ... ries-iiac/

OBSI-IIROC info sharing worries IIAC
The relationship with IIROC may change how firms approach OBSI inquiries, a letter says

By: James Langton
November 15, 2019

An industry trade group says proposals to allow more information sharing between the Ombusdman for Banking Services and Investments (OBSI) and the Investment Industry Regulatory Organization of Canada (IIROC) would make dispute resolutions more costly and legalistic.

In a letter to IIROC, the Investment Industry Association of Canada (IIAC) is seeking more information from the SRO about proposed rule changes involving its ability to communicate with OBSI.

IIROC proposed rule changes on Oct. 17 that would eliminate restrictions on the information that IIROC can receive from OBSI.

“The IIAC would like to obtain clarifications on how IIROC intends on using this new power to compel disclosure, as the practical effect of the proposed amendments will be to allow IIROC to access all of the information in the ombudsman’s possession, regardless of the circumstances,” the trade group says in its letter.

Among other things, the group is asking the SRO to detail the type of information it would be seeking, how that information will be used by IIROC, and whether it can form the basis of an enforcement action.

It also warns that the change to IIROC rules could impact OBSI’s operations.

“We are concerned that the proposed amendments may have unintended consequences affecting the objective that OBSI provide an accessible, low cost and non-legalistic process to investors and firms,” it says.

For instance, IIAC says that when OBSI interviews an advisor to investigate a complaint under the current process, these interviews are usually informal and don’t involve lawyers. However, if the information obtained in these interviews is going to be used by IIROC, that may change how firms approach OBSI’s inquiries, it suggests.

“If the content of the interviews could now form the basis for regulatory action, the proposed amendments could be construed as OBSI effectively undertaking an interview for the IIROC enforcement department. This would change the tone of relations between advisors, firms and OBSI, as OBSI will be in a position where it may be viewed as having a regulatory function,” it says.

Additionally, materials provided to IIROC “may be discoverable in civil litigation,” IIAC says, which will likely push firms, or advisors, to involve legal counsel in OBSI interviews. That would increase costs for firms and advisors, as well as for OBSI, IIAC says.

Moreover, IIAC says that firms and advisors should have access to any materials that OBSI provides to IIROC; that the rules should include an exception for claims of privilege; and that IIROC should develop guidance on how information obtained from OBSI can be used by the SRO’s staff.

It also suggests that OBSI’s terms of reference will have to be revised to “ensure these new quasi-regulatory functions do not detract from its role as an independent dispute resolution body.”

(Advocate comment: I have seen OBSI investigations where OBSI appears to take an industry favorable side, and I am afraid the track record suggests industry “quid pro quo’s” of a similar kind to the ones that render the SEC rather self serving and detrimental to the public interest.)

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

Postby admin » Sat Nov 16, 2019 10:49 am

“Consumers and investors should not feel coerced to accept reduced offers rather than face the possibility of a firm refusal of OBSI’s recommendation, resulting in no compensation at all,”- Fern Belisle , Ombudsman

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We are coming up to nearly 5 years since these wise words were spoken. Over the last 7 years ,Kenmar have requested that the CSA give OBSI a binding decision mandate 17 times , so far with no success. The harm to retail investors is incalculable . The harm to confidence in markets severe. Lowball settlements are now commonplace at every stage of the complaint process including OBSI. These deliberate actions harm investors well beyond the economic loss in the form of emotional and physical distress.Where are the Regulators?


The Ombudsman for Banking Services and Investments (OBSI) has a problem. Some member firms refuse to accept its recommendations.

In 2014, five investment firms turned down compensation for customers’ losses, OBSI said in its latest annual report.

Equity Associates refused to compensate a retired couple in the amount of $83,386. After the couple sold their home, their adviser invested the proceeds in unsuitable medium-risk and high-risk mutual funds

Richardson GMP refused to compensate several investors in the amounts of $232,500 and $66,366. They entrusted their retirement savings to an adviser who ignored their investment objectives and risk tolerance.

Armstrong & Quaile refused to compensate a retired couple for $34,000 after their adviser urged them to borrow to invest. They sold their investments after a market decline to cover a debt they could not afford to service.

Monarch Wealth Corp refused to compensate a young couple, new to Canada, in the amount of $30,628. They borrowed to invest after being told by their adviser they would not incur any losses.

Byron Capital refused to compensate a small business owner in the amount of $41,149. He bought high-risk and complex investments that his adviser said were medium-risk.

OBSI is not a regulator, but a non-profit group financed by member firms. When members ignore a recommendation to compensate clients, OBSI’s mandate requires it to “name and shame” the offenders.

In 2013, OBSI pointed to six firms that failed to cover $750,000 in client losses. And in 2102, it highlighted 10 firms that failed to cover $1.37 million in client losses.

Most firms do not reverse their decisions after facing public exposure. Investors have to seek justice in the courts, a more difficult process than using OBSI as a free complaint mediator.

Still, the naming and shaming process has worked, according to OBSI’s annual report.

Douglas Melville, ombudsman and chief executive officer, said the announcements showed member firms that OBSI was prepared to go public and freed up staff from seeking resolution with stubborn firms that refused to pay a penny. This helped eliminate a backlog of complaints from the financial crisis in 2008-2009.

Fernand Belisle, board chair, said the compensation refusals showed the rigour of OBSI’s assessments and highlighted a weakness in the system, allowing investors to be deprived of money they should have gotten back, given the facts of their cases.

Meanwhile, he pointed to a concerning trend: Some investment firms have settled complaints for amounts well below OBSI’s recommendations.

“Consumers and investors should not feel coerced to accept reduced offers rather than face the possibility of a firm refusal of OBSI’s recommendation, resulting in no compensation at all,” Belisle said. “Addressing both refusals of recommendations and ‘low-ball’ settlements will be key priorities for the board in 2015.”

Here are the numbers from OBSI’s 2014 report:

570 case files opened. Of those, 345 were about investing – down from 562 in 2010.
252 case files ended with monetary compensation, worth a total of $4,262,201. Of that amount, $151,793 went to banking clients and $4,112,408 to investment clients.
The average settlement for banking clients was $4,897, compared to $18,608 for investing clients.
Suitability was the biggest issue among investing clients (205 complaints), followed by suitability of margin or leverage schemes (69 complaints).
Member firms refused to compensate clients in 1.1 per cent of all closed case files.
OBSI has an expanded mandate to work with clients of portfolio management firms, smaller market dealers and scholarship plan dealers. Almost 1,000 new firms have joined its ranks, which OBSI sees as a vote of confidence by Canada’s investment regulators.

Neil Gross is executive director of FAIR Canada, an investor advocacy group and registered charity. (I’m the board chair.).
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Re: OBSI an industry body trying to help the public?

Postby admin » Sat Nov 16, 2019 10:31 am

HI Larry & Stan :

This was (as note) in a recent Ombudsman correspondence I received.

Note: Any materials prepared as a result of a complaint submitted to the Ombudsman, including the complaint itself, and any material produced by the Ombudsman, such as this email or attachments, cannot be used in any other proceedings, including before a board or court. This applies whether you or the Ombudsman have possession of any of these materials

To your knowledge (just thought I’d check that either or both of you might know) . . . is this part of the Ombudsman Act unique to Alberta’s Provincial Act ?

Gotta say ~ it hits me with the thought that those people who want to do what they can to solve problems (eg. Contact Ombudsman, etc.) are expected to give up the Human Right to have access to a court house, public hearing, etc. (in the future) should those problems NOT be solved by using these other approaches such as an Ombudsman.


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

Postby admin » Wed Sep 25, 2019 7:51 am

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https://www.wealthprofessional.ca/marke ... 04458.aspx

Don't ignore impact of lowball offers on complainants, says advocate
by Leo Almazora 25 Sep 2019

Despite years of calls from advocacy groups around Canada, the Ombudsman for Banking Services and Investments (OBSI) still lacks the ability to issue binding decisions in favour of investors with valid complaints. And as a new report argues, that absence of authority enables an unfair environment for investors seeking reparations.

“The lack of a binding OBSI decision mandate shifts the playing field in favour of dealers and promotes lowballing at earlier stages of the complaint,”
said investor protection group Kenmar Associates.

In a paper titled Lowball Settlements and Investor Protection, the group cited figures from 2016, the most recent available, finding that complainants received an average of $41,927 less than OBSI ruled they should be given in compensation. It also suggested that victims of financial assault tend to be financially unsophisticated investors of modest means, with elderly individuals, widows, new Canadians, and other vulnerable individuals being disproportionately targeted.

Payments below the amounts ordered by OBSI, the report argued, can directly impact people’s ability to recover lost financial resources that they vitally need, as well as the quality of their life in retirement. Their mental state, sense of well-being, and ability to deal with physical health issues can also be negatively affected.

Less-than-fair settlement offers, the report added, may come even before OBSI gets involved. Many victims get exhausted, financially and emotionally, by the complaints process; when they get a low offer from a firm in earlier stages, they are often discouraged by the lack of certainty that an OBSI order to pay a higher amount would even be followed.

“Dealers are secure in the knowledge that few retail investors will be either willing or able to challenge the offer,” the report said. “In terms of both quantity and value this type of lowballing is far more pervasive and harmful.”

It went on to argue that the complaint process is adversarial, citing comments from substantive response letters from dealers that appear to place the blame on investors. Complainants may be told that they were adequately informed through fund facts, quarterly account statements, and discussions on the nature of certain risky funds during the time they were sold. Some letters may also point to documents showing that the investor has a high-enough degree of risk tolerance, a sufficient degree of investing knowledge, or a willingness to accept dangers associated with leveraging.

“Investment dealers are well aware of the asymmetry faced by investors with respect to knowledge, resources and sophistication and the barrier to fairness faced by investors given the high cost of civil litigation for investors of modest means,”
the report contended.

Kenmar Associates also spoke out against the practice of requiring lowballed complainants to sign a non-disclosure agreement before they can receive any compensation, arguing that they are used by to manipulate investors into keeping certain information under wraps when it actually shouldn’t be kept secret.

“It’s important to note that not all non-disclosure agreements are nefarious,” the report said.
“Lowballed Complainants may or may not be signing NDAs with informed consent but they are definitely signing them under duress.
People need to know their rights when they sign an NDA.”

Kenmar called on the CSA to set standards for NDAs, such as plain-language text, assurance that individuals can share information with their family, and verbiage to clarify what they can and can’t reveal specifically, especially if they wish to approach law enforcement, regulators, or human rights commissions.
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Sep 19, 2019 9:22 pm

something brought up today from the past...

A look back to a 2016 article by Ken Kivenko. Worth repeating now since the organized criminal game continues today.

Gag orders are particularly harmful when a harmed retail investor navigates the complex CSA Approved Complaint handling system only to find that dealers can reject an OBSI compensation recommendation. The stress of unduly losing retirement savings is very significant but not getting full compensation after successfully pursuing a claim at OBSI can lead to financial distress. The next knockout punch comes the dealer insisting that in order to get the lowballed amount, the victim must sign a confidentiality Agreement so the problem is covered up. The final assault on the complainant comes when he/she finds out that the CSA won’t take action granting OBSI a binding decision mandate. This is happening in Canada right now- it is happening to vulnerable investors , seniors and retirees right now. A shame for Canada. The senior CSA execs should be held accountable for their decisions and publicly Named and Shamed.
http://www.canadianfundwatch.com/2016/0 ... lence.html

Full article posted below, thanks Ken for your service to the public interest.


Gag orders: Purchased Silence January , 2016

Behind closed doors, abused investors whose accounts imploded are receiving settlements from Canadian financial institutions including all the big fund dealers and banks. After a prolonged and aggravating process with customer service, compliance officers and ombudsman, frustrated investors finally attract attention by threatening litigation. Legal action and the threat of a public airing of their grievances seems to motivate financial institutions to settle, at least some times. The cost of legal action or even arbitration is not insignificant and the outcome is far from certain. Firms are well aware of this and take this into account when negotiating settlements. Rarely do these investors recoup their losses. Most are lucky to get 20-50 cents on the dollar . The vast majority decide to write it off as a learning experience.

Settlements can save both sides the money and time [ and investor stress] of dragging litigation through the courts. But you won't hear about them in the media because one of the stipulations made is to adhere to the terms of so-called Confidentiality clauses, Non-Disclosure Agreements or as investor advocates call them "Gag orders." As they pay their hush money, dealers add disclaimers that such settlement agreements do not constitute admission of wrongdoing by the firms -- though that’s the real reason they’re settling. In return for financial restitution, these investors are unfairly put in a position where they would violate legal contracts if they disclose specifics of their deal and become subject to legal intimidation.

Often, such settlement agreements provide that the parties will not make any negative or defamatory statements about one another, and require the customer to keep the terms of the settlement confidential. Sometimes the investor is so embarrassed at his situation he might actually welcome silence.

Some “creative ”agreements may require settling investors to withdraw or alter claims that have been filed with regulators. Such provisions are obstructive and frustrate the ability of regulators to enforce prevailing regulations. They also interfere with the ability of other law enforcement agencies to take appropriate action. According to regulators, such practices are not permitted.

"The industry covers up this huge problem of investors losing due to industry wrongdoing." - Stan
Buell, President, Small Investor Protection Association http://www.sipa.ca

Investors who settle disputes with their brokers or mutual fund dealers are routinely asked to sign such detailed settlement agreements, usually prepared by sharp, battle-tested lawyers. The investor, who is happy to be recouping at least some – typically a fraction- of his or her losses, is eager to sign on the dotted line and move on with his/her life. Consequently, he or she is unlikely to voice a vigorous objection to the so-called “boilerplate provisions ” of the Confidentiality provisions of the agreement. From the investor’s point of view, the dispute is over.

A fund dealer or brokerage firm may have sound business reasons for inserting the “boilerplate provisions. Confidentiality can make sense – at least from the broker’s point of view. Investment dealers do not want to encourage other similarly affected clients to file claims, or signal a predisposition to fair settlements.

Per Mutual Fund Dealers Association Policy 03 Handling Client Complaints dated Feb. 1, 2010 http://www.mfda.ca/regulation/policies/policy03.pdf “No Member or Approved Person of such Member may impose confidentiality restrictions on clients or a requirement to withdraw a complaint with respect to the MFDA or a securities commission, regulatory authority, law enforcement agency, SRO, stock exchange or other trading market as part of a resolution of a dispute or otherwise.” Similarly ,the Investment Industry Regulatory Organization of Canada ( IIROC http://www.iiroc.ca ) rules prohibit confidentiality conditions that are intended to prevent a client from initiating or continuing a complaint with a regulator or enforcement agency. Neither of these organizations are geared up to provide investor restitution so most victims “lose interest” in pursuing a regulatory complaint once they have been compensated.

These disclosure obligations do not extend to the media. which, regrettably, has under-reported the dark practice of gagging. The only exceptions are for disclosures made to lawyers, financial planners or accountants for income tax purposes.

For investors who have legitimate complaints against their dealers/brokers, the gagging can be emotionally stressful.
"After five years, I'm beaten into submission," one such investor told me this week. "I'm not allowed to disparage the bank at all. We're living in fear of the might of the bank closing down on us and suing for everything we've got." Source: Jonathan Chevreau, “Grievances never see the light of day: Banks, brokerages use confidentiality pacts to great effect “, Financial Post, June 26, 2004

Thus by keeping settlements secret, other investors with the firm are in the dark even though the malfeasance and the resultant settlement may also be applicable to them and may still be occurring.

“The "financial euthanasia" of Canadian retirees is as important an election issue as health care, Gag orders would never be tolerated in the health care system -- the public has a right to know about the spread of SARS or other diseases. Investors should receive similar warnings of financial industry practices that threaten investors' financial well-being” –Investor advocate Joe Killoran Source: Jonathan Chevreau, “Grievances never see the light of day: Banks, brokerages use confidentiality pacts to great effect “, Financial Post, June 26, 2004

Financial services firms aren’t the only one wanting to keep information confidential. A complaint to the Ombudsman for Banking Services and Investments ( OBSI http://www.obsi.ca) also places restrictions on disclosure. By signing their engagement letter, you agree that OBSI’s correspondence and discussions with you as part of the complaint process, and OBSI’s files, are confidential. You must also agree that in the event of any subsequent legal or other proceedings you will not use that correspondence or information. In addition, OBSI require you to agree that you will not seek to compel OBSI to produce its files and records, or seek to compel the Ombudsman or any other OBSI staff member or advisor to give evidence or testify in any such proceeding. This wouldn't be so bad if OBSI had retained their mandate to investigate systemic issues. If the firm rejects the OBSI compensation recommendation and you settle for something lower , OBSI will not implement their “ Name and Shame” protocol which means their “ Name and Shame” statistics understate the true situation.

Another threat to investors are provincial Limitations Acts which require investors to file for legal action within a certain period of discovery. In Ontario this is two years. This actually encourages financial services firms to drag out the complaint process and make low -ball offers with gag order attached. Investment dealers must respond to you in 90 days after which you can file a complaint with OBSI. Unlike OBSI , if you agree to send your complaint to the Bank's internal “ Ombudsman”, the limitation time clock keeps running. If this drags on beyond the statute of limitations period you will lose your right to civil litigation.

Gag orders perpetuate asymmetric information, with ordinary Canadians at the bottom of the food chain. Surely, allowing the cover-up of incompetence, fraud and criminality is not in the spirit and intent of the Securities Act. Although some of our regulatory leaders say they believe in transparency, nothing is being done about the industry practice of covering up widespread wrongdoing and then settling with complainants by making “ low ball”offers and covering up with gag orders.
As the late U.S. Supreme Curt Justice Louis Brandeis said: Sunlight is the best disinfectant. The financial services industry and its regulators needs to Walk the Talk. It’s time to implement real investor protection.
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Re: OBSI an industry body trying to help the public?

Postby admin » Wed Sep 11, 2019 8:37 am

SEPT 11, 2019

Mr. Grant Vingoe
Chair of the Canadian Securities Administrators (CSA) Joint Regulatory Committee (JRC) overseeing OBSI.

Dear Chairman Vingoe,

Government should not be allowing the industry and their regulators to promote the OBSI as a dispute resolution mechanism when it does not have a mandate to issue a binding decision.

Our Advisory Committee has expended an enormous effort attempting to get OBSI legitimized so investors have an acceptable means of dispute resolution, as civil litigation is both time consuming and expensive. At the same time the industry brutalizes victims by seemingly endless delays and inadequate responses.

The case of Armand Laflamme who lost $2 million and started litigation at age 61 illustrates the hopelessness of victims seeking restitution.

Although Laflamme received favourable judgments at each level of court it was continuously appealed until the Supreme Court ten years later issued a unanimous decision in his favour at age 71.

He died at age 74. There can be little doubt that ten years of litigation had taken its toll.

The concept of a national Ombudsman, initially proposed by the Department of Industry was a step in the right direction. However allowing the industry to provide that service and develop the mandate was more deceptive than effective.

Unfortunately OBSI at present is not a solution that SIPA can recommend because it has no mandate to make binding decisions which enables industry to further abuse victims with low-ball offers.

SIPA's Advisory Committee was very surprised and disturbed to read that after all this time, the JRC has decided not to provide OBSI a binding recommendation mandate as recommended by the Independent Review in 2016. When dealers shortchange complainants it reflects poorly on OBSI, the CSA and the wealth management industry in addition to the financial and emotional pain of the financial loss. In most cases this is a life altering event.

We feel that it would be irresponsible for the JRC not to reconsider their decision.

The failure of the regulatory agencies to provide the investor protection suggested by the Securities Acts and the rules and regulations of the Administrators is unacceptable. Abdicating responsibility to Self Regulatory Organizations and the Government allowing the Financial Consumer Agency of Canada to give the Banks the authority to self-regulate is an injustice to all Canadian small investors.

Not to provide an independent objective national ombudsman as envisaged by the Department of Industry so many years ago is a travesty of justice.

You have the opportunity to right a serious wrong. We urge the JRC to reconsider the decision not to provide OBSI with a binding recommendation mandate as recommended by the Independent Review in 2016.

Not to do so is an affront to all Canadian small investors.

Stan Buell, President

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

Postby admin » Mon Dec 10, 2018 1:17 pm

The current complaint-resolution process for retail investors at banks includes one critically unfair step, argues one advocate.

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In a letter sent to Canadian self-regulatory organizations and Canada’s Ombudsman for Banking Services and Investments (OBSI), Ken Kivenko of Kenmar Associates argued that the internal resolution process offered by bank-owned and insurance company-owned dealers gets dragged out for too long. In particular, he spoke out against the involvement of the dealers’ internal ombudsman as a third step in the process.

“[W]hile some dealers may use the three-step complaint process appropriately, it is inherently prone to misuse and abuse … it gives investment dealers an incentive to reject complaints at the first two steps on the basis that only a relatively small number of complainants will persevere,” he said. “[T]he dealer then has a third chance to rectify any shortcomings or, more likely, again provide an unsatisfactory offer.”

Complaining investors who are unsatisfied with the outcome of the three-step process can go to OBSI as a fourth step. Under Section 13.16 of NI 31-103, a dealer must open the option of approaching OBSI either 90 days after receiving a complaint or when the dealer informs the complainant of its decision, whichever comes first.

Dealers are not allowed to offer an alternative independent dispute-resolution or mediation service at the same time as they make OBSI available. But the NI 31-103 provision is silent on the use of an internal ombudsman. That has allowed investment dealers to divert hundreds of complaints toward their own internal ombudsman and delay decisions on complaints beyond the 90-day timeline — without fear of sanctions.

Such internal ombudsmen, Kivenko wrote, are not truly independent of the dealers, and therefore cannot be impartial in making decisions. Investors who are diverted to the internal ombudsman as a step toward complaint resolution, he added, do not realize that they are in an adversarial relationship with the arbitrator. “The use of the descriptor ‘Ombudsman’ is not being made in good faith by the banks,” he said.

Complainants who take an appeal to the third step, according to Kivenko, are required to sign a Consent Agreement that may prejudice future proceedings. In particular, the agreement includes a confidentiality clause and, in at least one case, gives the ombudsman the right to access all of the complainant’s accounts with the bank. The opacity of the internal ombudsmen’s loss-calculation methodology, he said, also works against complainants.

Kenmar Associates, along with FAIR Canada and the Pension Investment Association of Canada (PIAC), have previously reached out to the Canadian Securities Administrators (CSA) to urge that the complaint-handling system be changed. The CSA has not yet acted on their recommendations.

“We [at Kenmar] have found that if a complainant is rejected 3 times, it is highly unlikely he/she will proceed further. This may explain the relatively small number of investor complaints that reach OBSI,” Kivenko said. “Therefore, we recommend that the CSA abolish the three-step process.”

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

Postby admin » Sat Sep 08, 2018 7:31 pm

https://www.cbc.ca/news/business/scotia ... -1.4815023
Scotiabank walks away from consumer dispute watchdog OBSI

Royal Bank and TD already don't use OBSI, leaving just BMO and CIBC

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Pete Evans · CBC News · Posted: Sep 07, 2018 5:22 PM ET

The Ombudsman for Banking Services and Investments recommended more than $165,000 worth of remedies for consumers last year, to people who had complaints about their banks.(Dillon Hodgin/CBC)
The Bank of Nova Scotia will no longer use the Ombudsman for Banking Services and Investments to mediate disputes with its customers, leaving the banking watchdog with just two of Canada's five big banks under its thumb.

Scotiabank has advised OBSI that it will no longer use its services to mediate complaints with its retail banking customers as of Nov. 1, and will instead choose to resolve them via other means.

"We are disappointed with the bank's decision, but we understand that, under current banking rules, they have the right to make the choice," OBSI spokesperson Mark Wright said.

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When it was founded more than 20 years ago, OBSI was pitched as a more efficient way for the financial industry to resolve relatively small disputes with its customers, and handle complaints that are best processed outside the legal system.

When bank customers have a gripe about a bank, they will most likely first complain to the bank itself, but OBSI gets involved once it has been escalated up the chain, and needs an impartial mediator to decide on an appropriate remedy.

Last year, OBSI recommended that a total of $165,023 be given to people with complaints about banks, with an average finding of $2,089 and the largest single recommendation coming in at $17,653. While its rulings are non-binding, it can levy individual awards of up to $350,000 and can name and shame financial firms who choose to ignore their decisions on its website. Last year, none of the big banks ignored an OBSI ruling, the watchdog said.

Canada's big banks admit they overcharged customers — what went wrong?
Even though it is funded by industry (the big banks paid more than $1.1 million last year to fund OBSI's operations) the watchdog is considered to be an independent agency, and it's a free service for upset consumers.

In its most recent annual report, OBSI says it handled 370 investigations from consumers about their banks last year, or a little more than one per day. That was up from 290 complaints filed in 2016.

GO PUBLICDisappearing deposits: What happens when banks lose your money
Last year, OBSI ruled in favour of consumers roughly one out of every five times it heard a case. In 2017:

OBSI got 131 complaints about Scotiabank, and the ombud sided with the customer in 23 of those cases.
OBSI got 77 about CIBC, and ruled with the customer in 13 of them.
OBSI heard 52 complaints about the Bank of Montreal, and sided with the customer in 13 of them.
Those numbers don't include complaints from Canada's two biggest banks, Royal Bank and Toronto-Dominion, which both opted out of using OBSI years ago. Instead, they use another third-party firm to resolve disputes, called ADR Chambers Banking Ombuds Office or ADRBO.

John Lawford, executive director of consumer rights group the Public Interest Advocacy Centre, said Scotiabank's decision to leave the group is disappointing, because it's another body blow to an agency that could be powerful tool for consumers.

GO PUBLICAgainst the odds: Why customers often lose in battles with banks
"It's not perfect but it's open, it's transparent, it's independent and it's fair to the extent it can be," he said.

"It's not toothless," Lawford said, "if people gave it a chance it wouldn't be."

While Lawford said he'd be in favour of a banking dispute resolution body that's fully funded and controlled by government and not beholden to the industry, the government has repeatedly shied away from taking that step.

"The best we can do is shove everybody back under the one umbrella [so] people will know where to take their complaints," he said.

In the absence of a fully independent body, Lawford said he is in favour of giving more powers of enforcement to OBSI, because he doesn't like the lack of transparency at alternatives such as ADRBO, which "doesn't adhere to the same openness principles," and isn't always transparent about decision details, he said.

Complaints about Canadian banks increased 28% last year, ombudsman says
"For those customers of Scotiabank, they will unfortunately I believe have less success with their banking complaints and be dissuaded from bringing them."

Scotiabank's decision also affects customers of Tangerine, the online bank that Scotiabank bought in 2012, when it was known as ING.

The move also means that of the big five banks, only Bank of Montreal and CIBC will remain under OBSI's umbrella for their retail banking operations as of November — although customers of Scotiabank's investment arms would still be free to complain to OBSI.

"I'm concerned because I don't see any rational reason ... why BMO and CIBC wouldn't follow them out the door within months," Lawford said.

"We still think OBSI is independent and a proper place to do it and everybody should be going there."

Scotiabank declined to comment to CBC News for this story, or provide any indication how they plan to mediate escalated consumer disputes on its retail banking side in future.
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Re: OBSI an industry body trying to help the public?

Postby admin » Mon Jul 16, 2018 6:03 pm

The industry-funded ombudsman can't enforce payments or even compel member financial institutions to co-operate. And his recommendations are limited to claims of $350,000. Mr. Melville's biggest stick is to publish the names of firms that don't pay up – a "rather anemic remedy," Judge Shaughnessy suggested.

"A truly impartial and independent body would have control over its process," he declared bluntly.

https://www.theglobeandmail.com/report- ... le4171746/

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Courts stepping up for aggrieved investors
Barrie McKenna
Douglas Melville is an essential cog in the regime that shields millions of Canadian investors from abuse by financial institutions.

The Ombudsman for Banking Services and Investments can secure compensation if you lose money due to bad advice, mistakes or unfair treatment.

But the process falls short of "access to justice" for aggrieved investors, as Ontario Superior Court Justice Bryan Shaughnessy pointed out in a recent decision.

The industry-funded ombudsman can't enforce payments or even compel member financial institutions to co-operate. And his recommendations are limited to claims of $350,000. Mr. Melville's biggest stick is to publish the names of firms that don't pay up – a "rather anemic remedy," Judge Shaughnessy suggested.

"A truly impartial and independent body would have control over its process," he declared bluntly.

And so the judge cleared the way for a class-action lawsuit against Industrial Alliance's mutual fund subsidiary, Investia Financial Services Inc., along with Money Concepts (Barrie) and other affiliated companies and individuals.

The case centres on allegations that financial advisers systematically pushed clients of modest means to borrow large sums of money to buy mutual funds. The defendants deny the allegations, which haven't been proven in court.

But the case highlights something much more important: that the patchwork of federal, provincial and self-regulation in the massive financial advice industry isn't working.

Faced with regulatory lapses, the courts are stepping up. Already this year Ontario judges have given the green light to three major class-action lawsuits targeting financial industry sales practices.

"The three cases all show the courts are prepared to let clients proceed in a class action where either the firm or the regulator has not done an adequate job," said Ottawa lawyer John Hollander of Doucet McBride LLP, who represents investors in the Investia case.


Earlier this month, another Ontario Superior Court judge gave the go-ahead to a class action against BMO Nesbitt Burns involving allegations of hidden fees on foreign exchange transactions in registered accounts, such as Registered Retirement Savings Plans. And an Ontario Court of Appeal judge has also cleared the way for a class-action suit against Investors Group subsidiary IG Investment Management Ltd. over losses suffered by investors due to alleged "market timing" of mutual funds.

The investor-adviser relationship is likewise attracting the attention of the Ontario Securities Commission. The OSC is exploring whether to impose a "fiduciary duty" requiring advisers to put their clients' interests first – a standard similar to what lawyers, accountants and other professionals face.

Naturally, the financial services industry wants less regulation, not more. Some major institutions already deem the ombudsman's moral suasion too onerous. Royal Bank of Canada and Toronto-Dominion Bank have pulled out of the banking complaints process entirely (although its brokerage subsidiaries remain in). In more than a dozen cases, firms have balked at paying settlements. TD's pullout last year forced a cut in OBSI's 2012 budget.

That prompted OBSI chair Peggy-Anne Brown to warn ominously last week that the ombudsman's survival is threatened by a "power struggle" between the interests of consumers and "large and powerful financial firms."

As Wednesday's annual RRSP deadline nears, Canadians are increasingly masters of their own financial destiny. But they're masters of a universe that's fraught with market risk and imperfect regulation.

Canadians are getting squeezed by a volatile stock market, meagre returns on savings products and a financial services maze that too many don't fully understand.

Many investors assume brokers and advisers have a duty to act in their best interests. But that's not the legal obligation, and the line is unclear when advisers are compensated through unseen fees charged by the producers of those financial products.

"There is no government-enforced standard or mandatory professional oversight for competent, ethical and professional behaviour," acknowledged the Financial Planning Standards Council, a not-for-profit group that oversees the Certified Financial Planner designation.

This matters now, more than ever, because policy decisions are shifting financial responsibility to individuals.

Workplace pensions are no longer the norm in the private sector as companies continue to scrap predictable defined benefit plans. Ottawa is essentially pushing an aging population into the arms of the financial services industry. RRSPs, tax-free savings accounts, registered education savings plans and the newly created pooled registered pension plans (for employees of small businesses) all encourage private savings, typically managed by financial advisers.

Shifting financial responsibility to individuals is a reasonable policy goal. But it doesn't absolve governments of the obligation to shield Canadians from harm.

The courts are sending a pointed message.

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

Postby admin » Wed Jun 13, 2018 7:29 am

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Protocol for Handling Systemic Issues Ombudsman for Banking Services and Investment (OBSI) and OBSI Joint Regulators Committee (JRC)

[i]OBSI's Terms of Reference were amended in December 2013 to remove OBSI's systemic issue investigative powers.[/i

The Amended and Restated Memorandum of Understanding concerning oversight of OBSI among the Canadian Securities Administrators (CSA) and OBSI provides that the chair of 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.

This means that if a bank is discovered to be financially abusing Mrs Jones, OBSI can act within their limited powers...however if a bank is discovered to be financially abusing millions of people in a similar, systemic manner, OSBI is forbidden to act but must instead inform the provincial securities commissions...who are 100% paid (and chosen?) by the very industry that OBSI would be investigating in this hypothetical case...

Thus, the system (and the oversight by OBSI) appears cleverly designed to erect a facade of protection of Canada, whilst truly acting to prevent meaningful protection of Canadians.

It is in the interests of investors and registrant ("Registrant" means a registered firm and a registered individual) that there is a process for the referral and review of these systemic issues.

The following protocol will be followed with regard to systemic issues.

Definition of Systemic Issues

Systemic issues as referred to in this protocol shall encompass the following:

multiple complaints against one or more registered individuals about products or services provided to investors,
multiple complaints against the same registered firm about similar products or services provided to investors, or
the same complaint against multiple registered firms in a registration category and/or about similar products or services provided to investors which appear likely to have significant regulatory implications or to raise concerns about the registrant's fitness for registration.
OBSI Process

The OBSI Chair must inform the CSA Designates, in writing, of any potential systemic issue identified by OBSI within 30 days of OBSI making such a determination, providing sufficient detail about why OBSI considers the matter to be a systemic issue.

For purposes of this protocol, CSA Designates means those CSA staff representatives who are members of the JRC.

In determining whether there is a potential systemic issue, OBSI may consult with the JRC.

On request of a CSA Designate, OBSI will provide the name of the registered firm and/or the registered individual along with details of the issue. OBSI will continue to investigate and proceed with complaint(s) in the ordinary course.

Response to OBSI Notification

The CSA Designate which is the principal regulator for the registered firm will make the determination to investigate the systemic issue and/or refer it to the appropriate SRO for further analysis. If the principal regulator is not a CSA Designate, the CSA Designates shall advise the principal regulator of the systemic issue. If the registered firm and/or registered individual(s) are registered in more than one jurisdiction, the principal regulator will coordinate and inform the other regulators of the systemic issue and where appropriate may coordinate the analysis with the other regulators.

To determine next steps, the principal regulator, in consultation with the appropriate SRO (where applicable), will evaluate whether a systemic issue exists and assess the impact of the systemic issue on the registrant, the registrant category and/or investors.

Once the initial assessment has been completed, the principal regulator and/or the appropriate SRO may pursue a variety of responses. These may include, but are not limited to:

initiating a compliance review or an enforcement investigation of the registered individual and/or registered firm relating to the systemic issue and/or the SRO undertaking a review of the registered individual and/or registered firm relating to the systemic issue, where this is within the jurisdiction of an SRO,
initiating compliance reviews of the industry through sweeps on registered firm products and/or services, or
assessing whether additional guidance and/or policy work are required to mitigate the systemic issue either at the CSA or SRO level.
If, following an initial review, the conduct at issue is the result of the acts or omissions of the registered individual and/or registered firm, the principal regulator or appropriate SRO may document the matter in the registrant's permanent registration record maintained on the National Registration Database (Recorded under the Alert category of Regulatory Notes on the National Registration Database), and where appropriate, may take further regulatory action such as terms and conditions or suspension of registration in accordance with the appropriate regulatory requirements.

If the systemic issue is referred to:

an SRO for review, the SRO will keep the JRC and the principal regulator informed of the review
a principal regulator that is not a CSA Designate, the principal regulator shall be asked to report back to the CSA Designates.
Each CSA Designate will advise the JRC at the next JRC meeting of any potential systemic issue brought to the CSA Designate's attention, including the steps that have been taken or will be taken to respond to the potential systemic issue by the principal regulator or an SRO.

1 Systemic Issue was defined in the TORs as 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.

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

Postby admin » Wed Jun 13, 2018 7:23 am

June 13, 2018

To: Ombudsman for Banking Services and Investments (OBSI)

Ms Sarah Bradley, Ombudsman and Chief Executive Officer (CEO)

It is disturbing to read a copy of a letter to you and copied to me from Ken Kivenko who for many years has volunteered countless time to intervene for victims of the investment industry to help them attempt to resolve their disputes. The complexities of the industry and regulations are beyond the ordinary Canadian who does not have the high net worth to warrant a portfolio manager with a fiduciary responsibility. The majority of Canadians are dealing with representatives motivated by commissions and there is no legal requirement for them to look after a client's best interests.

The letter indicates that a new standard response from OBSI now reads in part:
“We have completed our investigation of your complaint against Xxx . You can choose to pursue resolution through other forums such as mediation and arbitration. However, OBSI cannot discuss your complaint with the intervenor you appoint and you can only share our findings with your professional advisors.
If it is not a mistake, this is totally unacceptable. Victims of industry fraud and unfair practices need help to have their disputes addressed. Civil litigation is often not affordable. An intervenor is often the only way a victim can have their dispute adequately addressed.

If that is indeed a new policy it would indicate it is time for Government to realize that an industry supported OBSI is not acceptable for a society that believes in protecting its citizens from unfair practices.

We remain hopeful that FINA will finally realize the issues that Canadians face when dealing with the investment industry and their regulators is not acceptable and that fair and affordable dispute resolution mechanisms are needed.

The GOC must introduce much needed regulation to establish fiduciary responsibility for the handling of Canadians savings and investments for all citizens. At the same time the GOC must also establish an independent investor protection authority with the powers outlined in our joint report with CARP "Giving Small Investors a Fair Chance" so that all Canadians may receive fair treatment.


Stan Buell

Small Investor Protection Association
Seeking Truth and Justice
e-mail: sipa.toronto@gmail.com
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Re: OBSI an industry body trying to help the public?

Postby admin » Thu Dec 07, 2017 5:22 pm

Firms must ensure they make adequate disclosure regarding the use of internal ombudsmen

Firms must ensure they make adequate disclosure regarding the use of internal ombudsmen

By James Langton | December 07, 2017

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Securities regulators are stopping short of giving the Ombudsman for Banking Services and Investments (OBSI) the power to make binding investor compensation recommendations — instead, they are warning them that they may face increased regulatory scrutiny for resisting OBSI's recommendations.

In a joint notice published Thursday, the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada (IIROC), and the Mutual Fund Dealers Association of Canada (MFDA), are highlighting their concerns with current industry complaint-handling practices.

Firms that refuse OBSI recommendations, or provide clients with "low-ball" settlements, may face increased attention from the regulators themselves, the notice says. While not every instance of refusing an OBSI decision will necessarily attract regulators' attention, they warn that a pattern of resistance may well.

"The likelihood that staff would conclude that enquiries or a review is warranted will be significantly higher if a firm has shown a pattern of either refusing to compensate clients after recommendations by OBSI or settling matters at discounts from OBSI's recommendations," the joint notice says. A review by a provincial regulator or one of the self-regulatory organizations could lead to enforcement action, or conditions being sought on a firm's registration, the notice adds.

Regulators are also flagging the issue of firms using "internal ombudsmen" as an additional form of dispute resolution. Earlier this year, the investor advocacy group, the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) and the consumer group, the Public Interest Advocacy Centre (PIAC), warned that this practice is potentially misleading and confusing to investors, and that it could be harming their access to redress.

Read: No more internal ombudsmen?

Some of these concerns are echoed in the joint notice from regulators, which calls on firms to ensure that they are treating clients fairly and that they make adequate disclosure regarding the use of internal ombudsmen, and that disclosure about OBSI's services is given "at least equal prominence", among other things.

"It is never an acceptable practice for a firm to operate its complaint handling system in a manner in which investors are being misled or worn down,"
the notice says.

"We expect firms to participate in OBSI's dispute resolution process in a manner consistent with their obligation to deal fairly, honestly and in good faith with their clients and to respond to each customer complaint in a manner that a reasonable investor would consider fair and effective,"

said Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers, in a statement.
Last year, an independent review recommended that OBSI be given the power to make binding compensation recommendations, among a series of other proposed reforms designed to shore up the dispute resolution service. The regulators have yet to follow through on those recommendations.
In the joint notice, regulators say they are "continuing to consider options for strengthening OBSI's ability to secure redress for investors”.

http://www.investmentexecutive.com/-/re ... 0499300000
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