The departure of the financial services sector’s ombudsman, Doug Melville, represents yet another setback for investor restitution in Canada. Melville, who is stepping down on May 31 to head up the ombudservice in the Channel Islands, has been with Canada’s Ombudsman for Banking Services and Investments (OBSI) since 2006, and has been OBSI’s head since 2009 – a period that has seen the service face a series of unprecedented challenges, including a huge spike in complaints following the global financial crisis, increasing resistance to OBSI’s work and the withdrawal of a couple of big banks.
An independent review of OBSI in 2011 concluded that the sector’s complaints about OBSI’s work were unjustified, and that review recommended sweeping changes to bolster OBSI’s status – including binding powers, mandatory membership and enhanced governance.
But, while OBSI has worked hard to boost its capabilities and clear the backlog of complaints that it was saddled with after the financial crisis, the ombudservice has been let down by higher authorities. Federal policy-makers declined to make OBSI the sole provider of dispute-resolution services for banking industry complaints. On the investment side, the Canadian Securities Administrators did adopt a rule requiring all of the firms under its jurisdiction to use OBSI (which had the effect of doubling its membership last year).
Since then, the number of refusals OBSI has faced has climbed each year. As of 2011, OBSI had only one firm ever refuse a compensation recommendation. Since the review, three firms refused recommendations in 2012; with five refusals in 2013, and six in 2014. That’s a worrying trend.
Moreover, OBSI’s recent annual report notes that the ombudservice is seeing an increasing number of clients accept low-ball settlement offers from firms rather than risk receiving no compensation at all. That’s a clear consequence of the trend in refusals.
Melville’s departure seems to represent another setback. While there is bench strength within OBSI, the sudden exit of its top man, who has led OBSI through this difficult period, is yet another distressing development.
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