The Canadian Securities Administrators (CSA) are pledging, once again, to introduce binding authority at the Ombudsman for Banking Services and Investments (OBSI).
Independent assessments of OBSI — including a review published earlier this year — have repeatedly called for the group to be provided with binding authority, citing concerns that the “name and shame” powers that it was initially endowed with have proven inadequate.
Concerns about the lack of enforcement powers for OBSI have arisen both because a number of investment firms have refused its compensation recommendations, and because the lack of binding authority has created an environment that encourages harmed investors to accept low-ball settlement offers.
Today, the CSA announced that it is now developing a proposal for comment that contemplates providing OBSI with binding authority, which it expects to publish for public comment in the year ahead.
“The CSA’s contemplated framework aims to balance investors’ need for an accessible procedure with the need for fairness, proportionality and efficiency for all parties,” said Stan Magidson, chair of the CSA and chair and CEO of the Alberta Securities Commission (ASC), in a release.
While the need for binding authority has been pointed out by independent reviews of OBSI, and has long been sought by investor advocates, critics of the idea have stressed the need for an appeal mechanism if OBSI has the power to order compensation, and have argued that this could make the service less efficient and more expensive.