Ombudsnetwork fades into history

Quietly and with no official announcement, the board of the Centre for the Financial Services Ombudsnetwork has voted to disband and close up shop.

The centre was launched in December 2001, intended to create a single contact or point of entry for consumers and provide direction to the appropriate industry ombudservice for dispute resolution, including the Ombudsman for Banking Services and Investments (OBSI), the General insurance OmbudService (GIO) and the Canadian Life and Health Insurance OmbudsService (CLHIO), which will all continue to operate.

The centre was created by six founding industry associations — the Canadian Bankers Association, the Canadian Life and Health Insurance Association, the Insurance Bureau of Canada, the IDA, IFIC and the MFDA, — around the same time the GIO and the CLHIO came into being, in response to a federal task force report that recommended the government create a federal ombudsman for the entire financial services industry.

At the time, the network promised to advertise itself widely, develop standards and become the single access window to industry services for consumers who had a complaint against the industry. The referral network did not engage in dispute resolution, but simply fielded calls and pointed consumers in the right direction. But by the time the board voted to disband, the CFSON was receiving fewer than 10 calls a day. Board members and representatives from the individual ombudsman services say this is because the system was working well, perhaps too well, and consumers were contacting the appropriate services directly.

At OBSI, for example, banks, MFDA, IDA and IFIC members have different by-law provisions that require members to provide information to clients who have disputes, directing them to the appropriate service if their complaints aren’t handled adequately.

“As our world has matured and grown, we’re finding that the vast majority of the people who are approaching us are approaching us directly, as they should be,” says OBSI head David Agnew.

Although the ombudsnetwork plans to maintain a consumer access website and phone contact information, winding up the centre as a stand-alone organization, they say, is a natural part of the sector’s evolution.

“I think the centre was very useful, particularly in the early days, they were a very useful bridge. It was new territory and people didn’t know what to expect,” says Agnew. “I think what we found is the infrastructure that ended up being built to support the system was working, perhaps even better than was expected.”

Despite reports put out in early 2002 announcing that the centre was open for business to quickly and effectively navigate the industry’s different complaint processes, insiders say the network was never intended to be a permanent structure, but simply a means to address government concerns about consumer redress, raised in the MacKay Task Force on the Future of the Canadian Financial Services Sector, released in the late 1990s.

At the time there were several different individual and industry specific complaint handling, arbitration and mediation services available. “Some were great, some were terrible and some didn’t exist at all,” says Agnew.

John Murray, IFIC’s senior vice president of policy and corporate affairs, says provincial level securities regulators were also thinking about adding their own dispute resolution mechanisms to the mix. Amidst this, he says the head of the Canadian Life and Health Insurance Association called a meeting of all financial services industry associations (the group is now known as the Financial Services Council of Canada), to discuss ways to rationalize the different proposed initiatives and create a single window access for consumers with formalized processes for resolving disputes.

“The CFSON was key in marketing the availability of the network to consumers. Their website and call centre operations were really the points of entry into the network,” Murray says.

Going forward, Agnew says the three ombudsman organizations plan to continue to present a united front for regulators, and plan to maintain the call centre and website for consumers. The group also plans to carry on its work on standards, and move forward with its initiative to apply International Standards Organization (ISO) principles on complaint handling and service quality. Once finalized, service at each ombudsman, starting with the OBSI, will be measured and rated using the ISO standards on a three year cycle.

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com