The Ombudsman for Banking Services and Investments (OBSI) shut down its Consumer and Investor Advisory Council (CIAC) in mid-June, one day after four of five CIAC members resigned, and three days after the release of a report that described a frayed relationship between the CIAC and the OBSI board and recommended a governance review.
The June 13, 2022 release of the OBSI five-year evaluation report authored by Poonam Puri included a description of an “impasse of communications” that resulted in limited efficacy of the CIAC. The Puri report noted that the CIAC – created to provide the input of consumers and investors into OBSI’s governance – had sought a “stronger, more independent voice” with a role similar to the Ontario Securities Commission’s Investor Advisory Panel, which operates independently and “engages in broader and more public advocacy as a result”.
The report noted that the CIAC also wanted OBSI to act as more of a consumer advocate, while the OBSI board viewed this as outside its mandate. The report also said that CIAC was “not using its time with OBSI’s board in a constructive way, raising the same issues (such as OBSI’s lack of binding authority) repeatedly at multiple meetings.” The resulting impasse limited the efficacy of the CIAC.
The Puri report recommended a strategic review of its governance structure that would clarify CIAC’s role. Its recommendations included transitioning to a board without specific categorical requirements, without specific nominees from industry organizations, roundtables with industry and consumer advocacy groups and then “carefully consider whether it is necessary or desirable to continue having a CIAC, given that the recommended governance structure described above would see an OBSI board that has balance in industry and investor backgrounds and where the OBSI board would receive input from industry and consumer stakeholders through other means.”
According to OBSI representatives, four of the five CIAC members, including chair Harold Geller, Harvey Naglie, Laurie Campbell and Andrew Teasdale submitted resignations at a joint meeting with the OBSI board on June 15. At a quarterly board meeting the following day, the board initiated a governance review, and suspended CIAC activities.
The Puri report did conclude that OBSI’s inability to secure redress for consumers limited its effectiveness, and that “name and shame” enforcement provided an economic incentive for parties to settle for amounts below OBSI’s recommendations. OBSI was established to resolve disputes between consumers and securities firms at no cost to the consumer. It only has the power to recommend settlements, and only up to $350,000. In instances where the recommendations are not followed, it can publish details about the firm involved in the dispute and its findings, (name and shame) but cannot require compensation to the consumers.
An OBSI representative indicated the board “is committed to strengthening and enhancing the consumer voice in the organization’s governance.” The one CIAC member who did not resign (Mohinder Bajwa) will participate in the strategic governance review. Former CIAC chair Wendy Morris remains on the OBSI board as Consumer Interest Director.