Advocacy groups call on feds to fix banking ombud muddle

Consumer and investor advocates are calling on the federal government to follow through on its pledge to create a single ombudsman for the banking sector.

In a submission to the Department of Finance as part of its consultation for the 2023 budget, the group — which includes advocates such as FAIR Canada, CanAge, Prosper Canada, Option consommateurs, the Public Interest Advocacy Centre, Kenmar Associates, the Canadian Association of Retired Persons (CARP), and the Consumers Council of Canada — demanded that the government move ahead with promised reforms to the dispute resolution system for bank customers.

In their letter, the groups noted that the prime minister’s mandate letter to Finance Minister Chrystia Freeland in December 2021 called for the creation of a single, independent ombudsman.

“It has been over a year, and one budget, since the government identified this issue as a priority, yet we have seen no action,” they said in the submission.

The current system allows the banks to choose whether to use either the ADR Chambers Banking Ombuds Office or the Ombudsman for Banking Services and Investments (OBSI) to resolve consumer complaints. The system is “a significant ongoing concern to all of our organizations who advocate on behalf of Canada’s financial consumers, including those who are vulnerable and least able to successfully navigate and obtain redress from our current sub-par external complaint handling system,” they said.

The existing approach has been criticized by independent reviews, and the Financial Consumer Agency of Canada has raised concerns, the groups noted.

“It is critical that we replace this broken system with one that effectively levels the playing field for financial consumers and adheres to well-accepted international guidelines and best practice standards for banking ombuds services,” they said.

In particular, the groups called on the government to designate the non-profit OBSI as the sole ombudsman for banking complaints, and to reform OBSI to bring its service up to international standards in terms of enforcing its compensation rulings.

“This issue has grown increasingly urgent in the current economic climate,” they said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.