Board: Force banks to use OBSI

The Ombudsman for Banking Services and Investments (OBSI) has come out swinging, following the withdrawal of Toronto-Dominion Bank from the organization.

Hitting back, OBSI is recommending financial services regulators force banks to use OBSI, whether they like it or not, to ensure customers are protected at all times.

“Canadian consumers and investors deserve an independent, accessible, and effective service that meets the needs of consumers and operates in the public interest,” OBSI’s board said in a statement. “Government needs to know they have an effective partner in dispute resolution, one that independently and credibly deals with consumers and investors, and is transparent and accountable to regulators.”

The not-for-profit mediator believes an effective consumer protection service that operates in the public interest cannot survive without the voluntary support of the banking sector, or in the absence of that voluntary support, mandatory participation through designation under The Bank Act or the approval process contemplated by the anticipated regulations pursuant to Bill C-47.

TD is not the first bank to pull out of OBSI. Several years ago, Royal Bank of Canada did the same.

In announcing their decision, TD representatives suggested a reformed OBSI may be the answer.

“We agree with the regulators that one single, independent dispute service is preferable and that should be OBSI,” said TD’s internal ombudsman Paul Huyer. “We’re committed to work with regulators and OBSI to improve the service and reform it.”

OBSI was founded in 1996 as the Canadian banking ombudsman to review complaints by small business against the chartered banks. The mandate was soon expanded to cover unresolved consumer complaints as well. The OBSI now resolves disputes between participating banking services and investment firms and their customers if they can’t solve them on their own.

The OBSI has more than 600 participating firms across the banking services and investment sectors. Any regulated firm in the banking services and investment fields is eligible to join OBSI.