The Ombudsman for Banking Services and Investments (OBSI) has officially assumed the role of Canada’s sole external complaints body for the banks — a move expected to reduce delays and simplify the system for escalating banking issues.
The change, which took effect Friday, will also put an end to the controversial practice of allowing the banks to choose their own referee for resolving consumer complaints.
“As a result of the move to a single [external complaints body], Canadians now have a simpler and fairer complaint-handling system,” said Werner Liedtke, interim commissioner with the Financial Consumer Agency of Canada (FCAC), in a release.
Previously, the banks could choose between one of two external complaint-handling bodies: OBSI or the ADR Chambers Banking Ombuds Office (ADRBO).
The six Canadian banks that previously used ADRBO — Royal Bank of Canada, TD Bank, Scotiabank, National Bank of Canada, Tangerine Bank and Digital Commerce Bank — have now transferred to OBSI. ADRBO will finish investigating and resolving complaints it received and that remain open as of Friday, the release said.
The switch to a single external complaints handler addresses the findings of a 2020 report from the FCAC, which concluded that consumers face delays and complications when escalating their banking complaints.
As a result of the report and further consultation by the Department of Finance, the federal government introduced legislative measures to strengthen Canada’s external complaint-handling system in banking, and in 2023, Finance Minister Chrystia Freeland said OBSI would be designated as the sole external complaints body for federally regulated banks.
Investor advocacy organization FAIR Canada applauded the move on Friday.
“Having OBSI as the single [external complaints body] will be better for everyone — especially for consumers who don’t have the capacity, time or money to navigate the complex complaint-handling landscape,” said Jean-Paul Bureaud, executive director of FAIR Canada, in a release.
The organization said the complaints system for Canadian investors still requires improvement. It called on governments and regulators to move forward with the Canadian Securities Administrators’ proposal to grant OBSI binding authority, which would make it mandatory for investment firms to comply with OBSI’s decisions.
The regulators previously noted that, while most retail complaints are resolved at the firm level, when complaints are escalated beyond these internal mechanisms, firms have refused OBSI’s compensation recommendations in some instances.
With files from James Langton