OBSI takes on role as sole complaints handler for federally regulated banks, standardizing the process
As of November 1, the Ombudsman for Banking Services, and Investments (OBSI) has assumed its new role as the single external complaints body (ECB) for federally regulated banks in Canada.
This shift, initiated by Finance Minister Chrystia Freeland in October 2023 and based on the Financial Consumer Agency of Canada’s (FCAC) recommendation, consolidates banking complaints under one independent organization.
The aim is to simplify the complaints process for consumers who previously had to navigate a two-body system.
The move to designate OBSI as the sole ECB comes after findings from FCAC’s 2020 report on the operations of external complaints bodies. The report highlighted consumer challenges, such as delays and procedural issues, when escalating complaints.
Before OBSI’s sole designation, banks could choose between OBSI and the ADR Chambers Banking Ombuds Office (ADRBO) to handle complaints. Under the new mandate, all federally regulated banks are now required to work with OBSI.
The six banks that previously partnered with ADRBO, including Royal Bank of Canada, TD Bank, and Scotiabank, have now transferred to OBSI. ADRBO, meanwhile, will continue to address any unresolved complaints it received before November 1.
Werner Liedtke, interim commissioner of the FCAC, emphasized the significance of this transition for Canadian consumers. “As a result of the move to a single ECB, Canadians now have a simpler and fairer complaint handling system,” he stated.
Liedtke also underscored FCAC’s role in overseeing the complaints process and “enhancing trust and confidence in financial institutions and the financial system.”
The FCAC will continue to supervise the complaint-handling standards in banking under the Bank Act, the FCAC Act, and the Financial Consumer Protection Framework Regulations.
Consumer rights groups, including FAIR Canada, support the shift to a single ECB, highlighting that it aligns with international standards for dispute resolution.
Jean-Paul Bureaud, executive director of FAIR Canada, noted, “Having OBSI as the single ECB will be better for everyone—especially for consumers who don’t have the capacity, time, or money to navigate the complex complaint-handling landscape.”
However, Bureaud and other advocates argue that more needs to be done to improve the complaints system, particularly in the investment sector.
FAIR Canada has long pushed for OBSI to be granted binding authority, which would require investment firms to adhere to OBSI’s recommendations for complaint resolutions.
Currently, investment firms can disregard OBSI’s recommendations, sometimes pressuring customers to accept lower compensation than what OBSI suggests.
According to FAIR Canada, from 2015 to 2020, investment firms provided consumers nearly $3m less than OBSI’s recommended amounts.
Binding authority, Bureaud said, would “align Canada with international standards for dispute resolution and boost confidence in its financial markets.”
OBSI is a national non-profit with over 25 years of experience in Canada. It provides an independent review for unresolved cases pending for over 56 days, as per the Financial Consumer Protection Framework.
OBSI has up to 120 days to issue a final recommendation to the bank and consumer if the complaint meets its mandate.
