On Monday June 6, the Ombudsman for Banking Services and Investments ("OBSI") released an 84 page independent evaluation of its investment mandate.
At the heart of the report is a recommendation that OBSI be permitted to have binding authority in respect of its recommendations. Currently, OBSI may make a recommendation in terms of financial payment from a firm to a consumer but the recommendation is not binding. The report states that the current model prevents OBSI from "fulfilling the fundamental role of an ombudsman". To fix this, the report recommends that OBSI be provided with the authority to compel financial institutions to pay awards to consumers.
The report points to a few statistics to suggest that some firms have been "obstructive" in dealing with OBSI and this is why binding authority should be afforded to it. It points to the fact that in 2015 3.5% of recommendations were refused by firms and in 18% of all cases, firms paid less than OBSI's recommendation. It also highlighted one instance of a firm whose efficiency was "less than optimal". OBSI did not provide an analysis of why the firms refused to accept OBSI's full recommendation in these cases.
In reaching its conclusion, the authors of the report consulted with industry, stakeholders, and compared OBSI to international ombudsmen (particularly European ombudsmen). The report indicates that a key concern of firms is that some feared that changing OBSI's mandate would effectively create another regulator and/or tribunal in a space where such forums already exist.
This may be a case of being careful what you wish for. If OBSI becomes a quasi-judicial body once it receives the ability to render binding determinations, query whether it would have to enhance its processes to meet the principles of natural justice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
