Readers of recent issues of Investment Executive can be forgiven for being more than a little confused about the Ombudsman for Banking Services and Investments, the financial services industry ombudsman service.

Are we the tyrants that Torys LLP securities litigator Joel Wiesenfeld makes us out to be, leaving in our wake a trail of investment firms cowed by our bully-boy threats? Or are we the investment industry’s best friend, as consultant Ken Kivenko portrays, biased against consumers, and oppressing small retail investors, seniors and immigrants?

Of course, the truth is that we are neither. And while both of these industry and consumer advocates are guilty of grasping for a headline with over-the-top rhetoric, they raise issues that — if they can park the hyperbole — are worth discussing.

First, the straight goods on OBSI. It an independent, alternative dispute resolution service. We offer consumers and firms an alternative to the legal system if they can’t settle a dispute on their own. Our service is informal, confidential and free to clients. We’re funded by the firms that participate in our service, not the taxpayer. Our governance structure and procedures protect our impartiality.

We are the outcome of discussion among government, industry and consumer representatives looking for effective, efficient ways to increase consumer protection in financial services. We make recommendations, but don’t have authority to issue binding orders.

Our “stick” is to make public a firm’s refusal to follow our recommendations. It’s not something we whisper to recalcitrant firms; it’s a provision that’s been front and centre in our rules from Day 1. “Name and shame” is standard stuff for ombudsmen unless they have the power to issue binding orders.

Finally, OBSI is unique in Canadian financial services. Amid the debate about national securities commissions and jurisdictional issues, we seamlessly cover federally regulated banks, loan and trust companies, a growing number of provincially regulated credit unions, and all members of the Investment Dealers Association of Canada, the Mutual Fund Dealers Association of Canada and the Investment Funds Institute of Canada. OBSI is available to customers of about 650 firms representing the vast majority of retail banking services and investment transactions in Canada.

Let’s also be clear about what we’re not.

We’re not a court of law. Our approach may not be entirely comfortable for those who thrive in the formal, costly and adversarial legal system, in which the tactics of the fight may be as important as the merits of a case in determining the outcome.

As the Chief Justice of the Supreme Court of Canada recently said: “For average Canadians, access to justice remains an ideal, not a reality.” It will be further out of reach for retail investors if we let the apparatus of the legal system — the appeals, cross-examinations, strategic delays, procedural straitjackets, and so on — take over. That’s when those with the deepest pockets have home-field advantage.

We’re also not consumer advocates, as some consumer advocates clearly want us to be. We remain firmly impartial in our work, not tallying up the outcomes of our files as proof of our toughness. We’re looking for fairness, not batting averages.

Unabashedly, our job is to level the playing field for consumers. It’s not our job to tip it in any party’s direction, but to make sure both sides get the opportunity to have their stories heard and objectively considered.

We have a skilled and committed team of investigators with training and experience in the industry, law and dispute resolution. In our recommendations, we take many factors into account — not only jurisprudence and regulation but also good industry practices and firm policies. Ultimately, we look to what is fair in all circumstances.

How can we do better? We need to continue to work to resolve cases more quickly, make sure our services are known to all consumers who need them and continue to expand our coverage. We are working with regulators and stakeholders on all these fronts.

The MFDA and IDA are consulting on new complaint-handling rules that will give firms time limits to deal with complaints and increase consumer awareness of our service. Under the registration reform initiative, the Canadian Securities Administrators are proposing all registered firms must join a dispute resolution service. These important advances deserve industry endorsement.

@page_break@A comprehensive and effective dispute resolution system for the retail investor is fundamental to the integrity of our financial markets. Judging by the co-operation and support we get from most of the firms in our service, that’s a consumer protection concept widely embraced by the industry.

As OBSI and the dispute resolution system evolve, we welcome spirited debate about how we can improve. But we must be vigilant that strident voices — with proposals that would compromise our independence, informality and accessibility — don’t win the day. IE



David Agnew is Canada’s Ombudsman for Banking Services and Investments.