Finance Minister will let banks choose the judge

The federal Finance Minister had to
choose between consumers or the banks.
The Minister chose the banks.
Financial Consumers Betrayed by Finance Minister's OBSI Decision

OTTAWA - The Public Interest Advocacy Centre (PIAC) today condemned the Minister of Finance's assertion made yesterday that the federal government will not require Canada's banks to resolve banking customers' disputes with the Ombudsman for Banking Services and Investments (OBSI). Instead the Minister has stated the government will publish rules allowing multiple consumer banking arbitration services - effectively allowing Canadian banks - to choose their own judge.

"The Minister knows regulations can't fix this.  He had to pick between consumers and banks.  He chose the banks," stated John Lawford, counsel for PIAC.
PIAC notes that this is also a hypocritical decision because the Minister has signed the G20 Final High-level Principles on Financial Consumer Protection that supported the common principles on financial consumer protection prepared by the Organisation for Economic Co-operation and Development (OECD) and Financial Stability Board (FSB) that require signatories to have "recourse to an independent redress process".

PIAC notes also that the Royal Bank of Canada and TD Bank already have moved their banking consumer dispute resolution to the ADR Chambers Banking Ombuds Office (ADRBO).  A regime with private arbitrators such as ADRBO, according to a recent report of the World Bank, "presents severe risks to independence and impartiality – because financial businesses may favour the ombudsman they consider likely to give businesses the best deal. It overlooks the role of financial ombudsmen as an alternative to the courts and creates one-sided competition – because, unlike the financial businesses, the consumers are not given any choice of ombudsman."

"The Minister has betrayed financial consumers by giving in to the bullying of banks to kill an effective, fair and independent banking ombudsman," concluded Lawford.

For more information, please contact:
John Lawford
Public Interest Advocacy Centre

OSBI : Option consommateurs, M. Flaherty tourne le dos aux consommateurs, au profit des banques 

« Nous sommes inquiets à l’effet que les institutions financières puissent confier le traitement des différends avec leurs clients à des entreprises privées », déclare Jean-François Vinet, analyste des services financiers à Option consommateurs.

See also the Apr 30, 2012 report by the National Post's Theresa Tedesco.

CNW, Consumer Voice Lost Without Independent OBSI, Council Worries

TORONTO, May 3, 2012 /CNW/ -  "The Consumer and Investor Advisory Council of the Ombudsman for Banking Services and Investments (OBSI) is extremely disappointed in comments attributed to the Minister of Finance Jim Flaherty indicating that alternative dispute resolution in the Canadian banking sector will not mandate that all banks work with OBSI. A system of multiple providers for banking dispute resolution has now apparently been sanctioned by these comments. 

Rather than using the framework of a not-for-profit, public interest ombudsman, who traditionally balances power and supports substantive access to justice for individual citizens, the proposed regime appears to embrace a narrower private company fee-for-service alternative dispute resolution model instead, with the banks and not the consumer as clients.

In this, many aspects of consumer protection are lost.  Canadian banking consumers who have suffered a loss or who are in conflict with their bank, either individually or collectively in systemic situations, will no longer have independent recourse. The Council has called for a robust binding statutory authority in this field.

In this time of fiscal challenge, and with the rapidly aging population, the Council believes that there is a greater-than-ever need for an organization or initiative which ensures support for both individual complainants as well as for the broad Canadian consumer banking issues.