Canada’s investment industry arbiter finally disclosed how much consumers lose because it lacks the ability to require proper compensation to harmed consumers 

The Ombudsman for Banking Services and Investments (OBSI) has long sought the ability to require the banks and investment firms it serves to properly compensate Canadians when the firms are found to have acted improperly. However, it only can make recommendations, and not binding decisions.

As a result, many investment firms have ‘low-balled’ their customers, offering settlements below what OBSI recommended. Lacking a better option, consumers have accepted those offers.

In its recently released 2024 Annual Report, OBSI disclosed that between 2019 to 2023, there were 33 instances with settlements below its recommended amounts. In total, the 33 consumers received $1,147,470 less than OBSI recommended. It noted that all of these cases involved investment firms. No bank has offered a settlement below what OBSI recommended. 

The low-ball offers are most common in higher value recommendations. OBSI disclosed that almost no consumers received a low settlement when recommendations were under $10,000. But for settlement amounts above $100,000, half of the consumers settled for less than what was recommended, and, on average, those consumers received 44 per cent less than recommended. 

Canadian Securities Administrators (CSA) have signalled their intent to give OBSI the power to make binding compensation decisions. However, some financial industry participants have objected to that initiative, slowing its progress.