The Ombudsman for Banking Services and Investments says it plans to revamp its governance, in response to an independent report calling for sweeping changes at the organization.
OBSI has finally responded to a report published last year by the Navigator Company of Australia, an international expert in financial ombudsman schemes, which called for a series of fundamental changes to shore up OBSI’s position within the industry. That report called on regulators to make membership in OBSI compulsory, give OBSI binding powers over firms; and, establish an appeal mechanism for its decisions; among other things. Most of the recommendations require regulatory involvement, and the report recommends that they be implemented as a package, and not on a piecemeal basis.
Now, OBSI says that its board considered the recommendations at meetings in January, and has decided to “focus first on what is doable and within its authority, followed by continued engagement with stakeholders on the remaining recommendations.”
Specifically, it notes that the independent reviewer recommended that OBSI’s board be restructured to include an independent chairman, to include a consumer voice, and to adopt a requirement that all directors be involved in all decisions. In response, the board has unanimously decided to undertake broad-based reform of its governance structure.
OBSI reports that an external search has already begun for the new chair. A new director nomination and selection policy will be developed, and it says that the consumer, investor and industry perspectives will be reflected in revised director criteria, an updated board skills and characteristics matrix, and the sourcing of board candidates. This will be completed in time to replace several long-serving independent directors who will step down at OBSI’s annual meeting in September, it promises.
Additionally, the board has decided to propose revisions to its investment suitability complaints methodology, following a consultation process that was completed last year. These proposals will be issued for a 60-day consultation period that, it says, will begin shortly.
And, during this phase of the consultation, OBSI will also participate in information sessions to be organized by the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada to obtain feedback on its approach to investment suitability complaints and our loss assessment methodology.
Finally, regarding the so-called “stuck” complaints, where firms are refusing to follow OBSI’s recommendations, OBSI says that its board has directed its management to develop a temporary independent review process that meets criteria set out by the regulators (the Canadian Securities Administrators, IIROC and the MFDA, which sent a letter to OBSI last October concerning the resolution of those complaints). Details of this process will also be made public soon, it says.
OBSI notes that a number of stuck cases have been resolved since the regulators first weighed in, and its board is optimistic that more of these stuck cases will be resolved in the coming weeks.