CARP is calling on the federal government to designate the Ombudsman for Banking Services and Investments (OBSI) as \u201cthe single, binding dispute resolution body for banking and investment services,\u201d the advocacy group for older Canadians announced Monday.<\/p>\n

Securities regulators have already named OBSI the sole provider of dispute resolution services for investment firms, but they have not yet provided it with the authority to make binding compensation recommendations.<\/p>\n

Banks, however, are not required to belong to OBSI, and CARP’s demand follows news that Bank of Nova Scotia will be withdrawing from the service in favour of a for-profit-alternative. Three banks \u2014 Royal Bank of Canada, Toronto-Dominion Bank, and National Bank of Canada \u2014 currently use ADR Chambers Banking Ombuds Office (ADRBO) to handle consumer complaints.<\/p>\n

\u201cThere is currently one ombuds office for investment services but two very different dispute resolution alternatives for banking services,\u201d said Wanda Morris, CARP\u2019s chief advocacy and engagement officer, in a statement. \u201cThis makes no sense. Banking consumers need a single ombuds office that is transparent, accountable, and accessible to consumers.\u201d<\/p>\n

CARP argues that the federal government\u2019s approach of allowing banks to choose their dispute resolution provider is \u201ca loophole in the system that needs to be closed.\u201d In its latestpre-budget submission to the Department of Finance Canada, CARP requests that OBSI be made the sole dispute resolution provider for banking customers, and that it will be reiterating this recommendation to the federal government.<\/p>\n

\u201cWe know that 35% of OBSI complainants are over age 65, and many of them are low income. The absence of a single, public ombuds office for banking services leaves vulnerable seniors without a transparent, accessible dispute resolution provider. The government has an obligation to protect these Canadian banking consumers,\u201d Morris says.<\/p>\n

The Canadian Foundation for the Advancement of Investor Rights (FAIR Canada) is siding with CARP in demanding that the federal government mandate OBSI as the sole, independent, national ombudservice for banking complaints.<\/p>\n

\u201cThe Bank Act currently permits banks to choose the external dispute resolution provider that will handle complaints that are not resolved to the consumer\u2019s satisfaction through the bank\u2019s internal processes,\u201d the investor advocacy group says in a statement, adding it, \u201cagrees with the World Bank that permitting such a system presents severe risks that a bank will favour the EDR service they consider likely to give them the best deal, creating one-sided competition, and undermining independence and impartiality.\u201d<\/p>\n

Allowing banks to choose between ombudservices \u201cresults in unfairness to consumers and prevents there from being an adequate consumer protection framework,\u201d FAIR Canada states. \u00a0\u00a0\u201cWe have serious concerns about the conflicts of interest, misaligned incentives, and level of transparency and accountability at ADRBO.\u201d<\/p>\n

The group\u00a0 previously made this recommendation to the federal finance minister in its latest submission on the federal financial sector legislative framework, and in a joint public statement with the Public Interest Advocacy Centre earlier this year.<\/p>\n