FAIR Focus

November 2023

In this month’s newsletter, we highlight a significant development when it comes to resolving complaints against banks and other federally regulated financial institutions. We are also pleased to feature FAIR Canada’s new 2023-2028 Strategic Plan, which outlines four strategic goals over the next five years. In addition, we highlight Financial Literacy Month, a FAIR Canada article on unlocking value in your investments, and a new Permission to Pause Campaign under What’s New.


A Big Win for Bank Customers, But There’s More to Do

On October 17, the federal government announced the Ombudsman for Banking Services and Investments (OBSI) would become the sole external complaints body (ECB) for all banking complaints in Canada. The announcement is a significant victory for Canadian bank customers!

Currently, banks can choose the ECB they want to adjudicate complaints against them, and customers have no say in the matter. Unfortunately, some banks chose to use an external ombudsman that operates on a for-profit basis, and was found not to be meeting expectations in several important areas following independent reviews. 

With this recent announcement, effective November 2024, Canada’s banks will have to use OBSI for those customer complaints they cannot resolve within 56 days. OBSI is an independent, non-profit organization that has been providing trusted and impartial ombuds services to Canadian banks and investment dealers for more than 25 years. The government’s announcement brings Canada more in line with international best practices and should produce better outcomes for Canadians.

FAIR Canada and a coalition of consumer advocates have repeatedly advocated for this approach, and we are pleased to see the federal government follow through on its commitment to address this important consumer fairness issue.

Despite this good news, there is one critical area where the process still falls short: OBSI’s recommendations that are accepted by the client are still not binding on the financial institution. While less of an issue for banking complaints, it is a serious issue when it comes to investment-related complaints. It means that investment firms can simply ignore OBSI’s recommendations, leaving investors with nothing. It also means, in many cases, investment firms have offered to settle a complaint for amounts lower than what OBSI recommended because they know OBSI can’t enforce its decisions.

Between 2015 and 2020, the latest independent review of OBSI found that investors received about $3 million less from investment firms

than what OBSI recommended.

Last month, the Joint Regulators Committee (JRC) that oversees OBSI published its annual report, emphasizing that low-ball settlements remain an area of concern for investment-related complaints. The report cited some worrying statistics about such complaints. Since OBSI’s 2018 fiscal year, clients received approximately $1.6 million less than what OBSI recommended. If we look back between 2015 and 2020, the latest independent review of OBSI found that investors received about $3 million less from investment firms than what OBSI recommended.

A solution to the problem of low-ball settlements is on the horizon. In October 2022, the Canadian Securities Administrators (CSA) announced their plan to publish a proposal this year to grant OBSI with the authority to make binding decisions on consumer complaints. Binding decision-making is a key feature of financial sector ombuds services in other jurisdictions, such as the United Kingdom, Ireland, Australia, and New Zealand. FAIR Canada has advocated for binding authority for more than 10 years, and we eagerly await the CSA’s imminent proposal for binding authority. It will align Canada’s complaint-handling system with international standards and strengthen OBSI’s ability to deliver fair complaint resolutions to investors. Canadians deserve nothing less than a world-class financial ombuds service.

To learn more about making a complaint, check out our comprehensive guide titled Getting Your Money Back – An Investor’s Guide to Navigating Canada’s Complaint System.

FAIR Canada’s Strategic Plan: Championing the Concerns of Investors

Our Board of Directors recently approved a five-year strategic plan outlining our goals and charting an ambitious path forward for FAIR Canada.

In our mission to champion the concerns of investors, FAIR Canada aspires to ensure that policymakers make well-informed decisions that balance the interests of retail investors with those of securities issuers and dealers.

Investors are best served when viewed as financial consumers, which means expanding advocacy beyond traditional securities regulations

into other areas that affect investors....

The rapid evolution of Canada’s financial markets, driven by technology advancements and shifting consumer preferences, underscores the need for an independent, national advocate to help policymakers navigate these challenges. Investors are best served when viewed as financial consumers, which means expanding advocacy beyond traditional securities regulations into other areas that affect investors in their financial journey.

Our strategic plan outlines four goals for the next five years:

  • Thought Leadership: FAIR Canada aims to be a trusted voice on issues that have an impact on individual investors. This includes providing informed commentary on policy proposals, advocating for changes in industry practices, and engaging with stakeholders and other consumer rights groups.

  • Public Outreach: We will expand our public outreach and increase awareness of our mission, advocacy work, and research. This includes enhancing media relations and social media presence, conducting and sharing investor-centric research, and actively participating in public discussions.

  • Sustainable Funding: We are committed to securing increased, sustainable funding to expand our advocacy efforts, expertise, and research capabilities.

  • Strong Governance and Resilience: We will maintain strong governance practices and enhance our ability to adapt to a changing environment.

FAIR Canada’s Strategic Plan reflects our commitment to advocating for the rights of individual investors and financial consumers. As the financial landscape continues to rapidly evolve, we are confident that with support from our stakeholders, we can achieve our strategic goals.

Let’s work together to build stronger financial markets in which Canadians can save and invest with less risk from poor advice and subpar products.

What’s New

Financial Literacy Month 2023

November marks the beginning of Financial Literacy Month! It’s an opportunity to remind investors that knowing your investment rights is just as crucial as understanding your investment choices. At FAIR Canada, we advocate that knowledgeable investors are empowered investors. Throughout the month, we’ll be highlighting some valuable tips and resources to inform investors about their investment rights and protections. In addition, the Government of Canada produced a campaign with practical resources to help Canadian consumers enhance their financial literacy.

Visit FAIRCanada.ca to explore our Investor Basics resources and learn more about knowing your rights as an investor.

FAIR Canada Featured in Canadian MoneySaver Magazine

FAIR Canada wrote an article called Unlocking Value in Your Investments for the November edition of Canadian MoneySaver magazine. The article, which is available to magazine subscribers, emphasizes the importance of understanding the impact of fees on your investment returns. It explores the fees associated with the two most common types of investment fund products: mutual funds and exchange-traded funds. The article also provides tips for navigating investment fees. To learn more about investing fees, check out our resource Understanding Fees and Statements.

Permission to Pause Campaign – The Financial and Consumer Services Commission of New Brunswick

The Financial and Consumer Services Commission of New Brunswick launched a new campaign called Permission to Pause. The campaign’s goal is to empower financial consumers, encouraging them to Pause and take a moment to verify the credentials of their financial service providers. Making an effort to check an individual’s registration is a quick and efficient way to safeguard your financial interests. To discover more about self-care for your financial well-being, check out the campaign!

If you want to confirm whether an individual is registered in another province, visit the Canadian Securities Administrators’ National Registration Search

Remember to follow us on LinkedIn and X (formerly Twitter)!

To learn more about our advocacy for investors, visit FAIRCanada.ca

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