OBSI officially began operations on Nov. 1 as the only institution tasked with handling consumer complaints involving federally regulated banks. It was designated as the exclusive external complaints body (ECB) in October of last year by Finance Minister Chrystia Freeland.
Under the new system — which was instituted in response to a 2020 report by the Financial Consumer Agency of Canada (FCAC) — all federally regulated banks must now be members of OBSI. The FCAC report found that consumers faced delays and complications when they escalated their complaints through the old system.
Banks previously had a choice between two external complaints bodies, OBSI or the ADR Chambers Banking Ombuds Office (ADRBO), both based in Toronto. Those affiliated with ADRBO —Royal Bank of Canada, TD Bank, Scotiabank, National Bank of Canada, Tangerine Bank and Digital Commerce Bank — have now transferred to OBSI.
OBSI was originally established in 1996 as the Canadian banking ombudsman.
The consolidation of the banking complaints system is good news for consumers but does not go far enough, said Toronto-based investor advocacy group FAIR Canada. The federal government and regulators should now make good on a Canadian Securities Administrators’ recommendation to give OBSI binding authority, said the organization’s executive director, Jean-Paul Bureaud.
“For more than a decade, FAIR Canada and fellow consumer groups have advocated for binding authority, as it will level the playing field between consumers and investment firms,” Bureaud said in a Nov. 1 statement.
“It will also align Canada with international standards for dispute resolution and boost confidence in its financial markets,” he added. “Binding authority would mark a major milestone in ensuring fairer outcomes for consumers in their investment disputes.”
Currently, investment firms can ignore OBSI’s recommendations for resolving investor complaints, noted the FAIR Canada statement.
“Some investment firms even pressure customers into accepting lower compensation than what OBSI suggests,” said the group. “From 2015 to 2020, investment firms paid consumers nearly$3 million less than OBSI had recommended.”
At the same time, Bureaud said, designating OBSI as the sole ECB for federally regulated banks and investment firms should make it easier and less expensive for consumers to navigate the “complex, complaint-handling landscape” and they will benefit from its 25 years of experience in providing fair, efficient dispute resolution services.
In a Nov. 1 news release, FCAC said the consolidation of complaint handling, combined with the complaint handling requirements introduced in 2022 under Canada’s Financial Consumer Protection Framework, will provide Canadians with a more effective complaint-handling system in banking.
Under federal legislation, one of FCAC’s key roles is to supervise the complaint-handling system within banks.
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