OBSI becomes single bank complaints body as streamlining comes into effect – BNN Bloomberg

TORONTO. Canadians now have a single place to appeal their banking issues after the federal government’s simplification of the system took effect on Friday.

The government said it had made the Ombudsman for Banking Services and Investments (OBSI) the sole external complaints body to reduce delays and complexity in the system. The change may also make more people aware that the option even exists.

A survey conducted several years ago by the Financial Consumer Agency of Canada found that 83 per cent of Canadians had never heard of OBSI or the banking ombudsman ADR Chambers, which until Friday covered RBC, TD, Scotiabank and its subsidiary Tangerine. and the National Bank.

As those banks that participated in ADR move to OBSI, its executive director Sarah Bradley says the transition should make it easier for Canadians to know where to turn.

“One of the main benefits of the single (external complaints body) system is that it really simplifies reporting, it helps Canadians know where to go if something goes wrong in their banking relationship,” Bradley said.

While many Canadians are still unaware, those who are are using the system more than ever before. In 2023, OBSI requests increased by 63 percent to more than 17,000.

More than 3,000 of them led to the opening of cases.

The increase comes as the government introduced other changes to the system, including a demand to speed up the handling of complaints, after the Financial Consumer Agency found too many consumers were abandoning the process halfway through.

A combination of increased complaints and new banks under OBSI’s umbrella has resulted in the office more than doubling its staff since 2022, Bradley said.

With more and more banking problems, it’s important to have an unbiased organization to assess them, she said. When banks were able to choose who to work with, it was natural to wonder what effect this would have on the arbitrator’s decision.

“When a bank can choose a dispute resolution provider, I think the natural question is, on what basis are they going to make that choice?”

According to Bradley, the single system will also make it easier to compare performance and responses across banks across Canada.

“This information is valuable to policymakers, it’s valuable to the public, it’s valuable to the industry.”

But while the system is now streamlined, Bradley said consumers shouldn’t expect major changes to the process, which typically favors banks.

Of the slightly fewer than 2,000 consumer complaint cases on which OBSI made recommendations last year, about 68 percent were dismissed.

One of the biggest areas of complaints and misconceptions is fraud. In 2023, the number of fraud complaints quadrupled compared to the year before and accounted for 40 percent of all banking cases.

“There’s a disconnect between the consumer’s expectation of protection and what’s actually the bank’s responsibility,” Bradley said.

She said many consumers are familiar with credit card fraud protection without liability and can expect the same protection for all banking products, such as personal accounts and debit cards.

“The reality is that the same protections are not available.”

The federal government held a consultation over the summer on potentially raising fraud detection requirements for banks and imposing limits on consumer liability, but it is unclear what will come of it.

But while many consumers are still leaving disappointed, others are seeing some compensation. In cases where OBSI recommended compensation, the average amount was $2,573, while overall it recommended $2.7 million in compensation to consumers.

Bradley said hopefully consumers will rarely need to use the system because it’s only for when issues can’t be resolved directly with the bank, but it’s important that people know it exists.

“Even knowing that there is a place they can go and the general awareness among consumers that if they haven’t been able to resolve a complaint with their bank, they have no options left, that we exist, we are here to help.”

This report by The Canadian Press was first published on October 31, 2024.

Companies in this story: (TSX:RBC; TSX:TD; TSX:CM; TSX:)

The Canadian Press