Policy-makers should consider carefully giving the Ombudsman for Banking Services and Investments (OBSI) the power to make its compensation recommendations binding, said Sarah Bradley, who became ombudsman and CEO of OBSI in September, at a conference hosted by the investor advocacy group, the Canadian Foundation for Advancement of Investor Rights (a.k.a. FAIR Canada) in Toronto on Monday.
During a panel discussion on different dispute-resolution models from around the world, Bradley suggested that the vast majority of OBSI’s stakeholders would benefit if it had the power to enforce its recommendations. However, she noted that there would also be costs to making this fundamental change to its mandate, which is why the decision to do so would have to be “considered carefully.”
Currently, OBSI only has the power to “name and shame” firms that don’t comply with its recommendations. For most of its history, the dispute-resolution service didn’t have to do that but, in recent years, OBSI has been unable to resolve a number of cases. This has resulted in the ombudservice naming firms that have refused its recommendations — a process that leaves investors without compensation and exposes the weakness of OBSI itself, Bradley said.
Shane Tregillis, chief ombudsman of Australia’s Financial Ombudsman Service (FOS) noted during the panel discussion that the FOS does have the power to make binding decisions but that, in practice, only about 10% of its recommendations go this route. The vast majority of its cases are settled.
Sujatha Sekhar Naik, CEO of Malayasia’s Securities Industry Dispute Resolution Center (SIDREC), noted that her organization’s decisions are also mandatory and, that policy-makers in her country consciously decided not to adopt a “name and shame” approach for its dispute-resolution service because it is not believed to be effective.