Canadian banks will be required to use the Ombudsman for Banking Services and Investments (OBSI) to handle consumer complaints they do not resolve, starting in November 2024.
The October 17 announcement by Deputy Prime Minister and Minister of Finance Chrystia Freeland will end the ability of Canadian banks to select their own external arbiter and restore OBSI to its original role.
The commitment to having a single not-for-profit independent arbiter for all banking customers was first made in the 2022 Federal Budget. In a small note in the 2023 budget, the authority to make the selection was given to the Financial Consumer Agency of Canada (FCAC).
From 1996 to 2008, all of Canada’s banks participated in a single national dispute resolution system, first known as the Canadian Banking Ombudsman, and then later as OBSI. It was designed to handle consumer complaints that were not satisfactorily resolved at the banks.
In 2008, Royal Bank retained a private firm (ADR Chambers) to provide external dispute resolution services, after disagreements with OBSI. TD Bank followed in 2011, after some high-profile disagreements with OBSI rulings. In July 2012, Canada’s Ministry of Finance formalized plans that banks needed to have an external dispute resolution provider, but did not mandate a specific provider, instead requiring FCAC to establish criteria.
National Bank (2017) and Scotiabank (2018) also left OBSI for ADR Chambers Banking Ombuds Office (ADRBO). In subsequent reviews, FCAC found OBSI superior to ADRBO, and openly questioned the merits of allowing banks to select their own arbiter,
“For too long, banks have been able to choose who adjudicates complaints from Canadians,” Freehand said at a news conference. “Canadians have asked for, and deserve better. With an independent, transparent, and not-for-profit ombudsperson, that is what they will receive.”
Freeland also reiterated commitments from the 2023 budget at the news conference. She said she has instructed FCAC to work to make more low- and no-fee bank accounts available to Canadians, reduce bank fees such as NSF charges, and reiterated that Canadian banks are expected to offer more flexibility in mortgages following guidelines announced in the budget.
Freeland also praised British Columbia’s recent changes affecting short-term housing rentals.
At the same news conference, Minister of Innovation, Science and Industry Francois-Philippe Champagne discussed efforts to make groceries and housing more affordable, and Treasury Board President Anita Anand announced plans to share the results of her spending review next month.