The Consumers Council of Canada urges the federal government to create a national statutory ombudsman for banking and investments now that it has become clear that Canada’s banks cannot peacefully cooperate within a system of dispute resolution that meets international standards of justice and fairness for consumers.
"The Minister of Finance should secure immediate commitment to the Ombudsman for Banking Services and Investments from the banks or legislate that, if at any time the government believes the banks lack commitment to OBSI, then it will exercise its authority to mandate an ombudsman," said Council President Don Mercer.
The Council respects the best efforts made by the Bank of Montreal, Scotiabank and the Canadian Imperial Bank of Commerce to facilitate OBSI. However, it has become clear the good example of these and other banks participating in OBSI has not rubbed off on the Royal Bank of Canada and TD Bank.
These two renegade banks threaten to undermine a constructive private-sector initiative that has improved consumer redress for individuals and small businesses. Many consumers assisted by OBSI have been vulnerable consumers with special needs.
All potential customers of the Royal and TD banks should carefully review the dispute resolution rights offered to them as an important factor in choosing a bank. Some current customers of the Royal and TD could find themselves caught at a disadvantage in resolving a dispute based on the changed terms of their banking relationship.
The federal government should exercise caution in creating or promoting new red tape that will complicate consumers’ pursuit of redress, when what is required is simple direction to the banks that they must support and submit to a national ombudsman.
OBSI slowly has increased its credibility as a series of scandals and market meltdowns since the 1990s led financial institutions to empower it to resolve consumer complaints rather than have government step in to impose a public system of dispute resolution.
OBSI has always been a compromise approach to consumer redress, albeit one that may have helped influence Canada’s banks to stay away from contentious sales and service practices that have plagued their foreign subsidiaries and competitors. OBSI’s ability to address the needs of vulnerable Canadians and small business owners has been important and welcome.
In recent years, Canadians have been proud of the relative safety and security within their banking system. Canada has been relatively immune to the political unrest and utter loss of consumer confidence manifesting itself in other large national economies. Canada’s banks will prosper most by maintaining an excellent relationship with their customers.