With complaints soaring, OBSI fees set to climb

With complaint volumes soaring, the fees that firms pay to fund dispute resolution are rising too.

The Ombudsman for Banking Services and Investments (OBSI) reported that case volume has jumped 261% this year, led by a 300% spike in banking sector complaints. Investment-related complaints are also up by more than 60% from last year’s numbers, which were already at a record high.

As a result, the fees that firms pay to fund OBSI’s activities are also heading higher.

For fiscal 2023, OBSI had a $12 million budget, but the large increase in its caseload prompted extra hiring that required it to spend $13 million. The agency had to tap its reserves to finance the added expenses, with this extra $1 million now being added to firms’ bill for 2024.

“Our board has determined that it is appropriate for us to recover the full amount of this deficit from participating firms in 2024,” OBSI said in a bulletin — adding that this is expected to be a one-time event, not a recurring expense.

Given that the bulk of the increase in complaints is being driven by the banking sector, banks will take that hardest hit — an increase of about 160% from 2023.

For investment dealers and mutual fund dealers, fees are also expected to rise by 9%. And, fees on exempt market dealers (EMDs) and portfolio managers are going up 4%.

Complaints involving investment dealers and fund dealers were up 40% year over year, while volumes in the EMD and portfolio manager sector were up 23%, OBSI said.

For scholarship plan dealers, fees are set to rise by 6%, while credit unions’ fees will remain unchanged, as their case volumes were flat.

The agency’s current budget for fiscal 2024 (which starts Nov. 1) is $15.5 million, up by 30% from 2023, to accommodate the sharp increase in complaints.

“For 2024, we expect to continue to respond to increased case volumes due to regulatory changes in the banking sector, and continued market volatility and financial uncertainty related to inflation and interest rate changes,” it said.

“To deal effectively with this ongoing consumer demand and growth in case volume, we will need to ensure that we have adequate staff resources to maintain our service levels,” it added.