The release of Ontario Auditor-General’s reports December 1 reads like a consumer protection catastrophe.
The complete package contains more than 1,300 pages of reports, including more than 20 value-for-money audits of Ontario regulatory authorities and broader public-sector programs, followup reviews on 2019 audits, and other specialized reports.
The most notable items for taxpayers in Auditor-General Bonnie Lysyk’s reports – if the focus of news reports are an indicator – might be the large amounts of COVID-19 aid sent to ineligible businesses and to small companies that the government rushed to fund without adequate controls or monitoring. Or perhaps that the Ontario Provincial Police has more than 1,000 vacancies for frontline constables, more than a quarter of its positions. And then there was the report’s confirmation that in early 2020, at the start of the pandemic, Ontario lacked adequate supplies of personal protective equipment for health care workers because of long-standing unaddressed issues at the Ministry of Health.
However, for Ontario residents considering how things are working out for them as consumers in the marketplace, different kinds of “value for money” problems might be of equal interest. For example, the reports describe oversight boards dominated by industry participants and subject to political interference, a lack of regular, required consumer protection inspections, poor complaint handling, and a lack of follow-up in general concerning previously identified compliance problems with satisfying consumer protection laws.
Here are a few notable examples of AGO findings with high consumer impact:
The Ontario Motor Vehicle Industry Council (OMVIC) is intended to provide consumer protection in auto sales, but the report found nine of 12 board members represented motor vehicle dealers.
OMVIC has increased vehicle transaction fees to improve public awareness and enforcement. However “the human resource devoted to its key operating areas including its complaint, inspection and registration departments remained largely unchanged,” the report said.
“Consumer awareness of OMVIC, the protections it offers and the laws regulating vehicle sales remains low,” the report determined.
OMVIC investigations were found to average 220 days, with most investigations resulting in no enforcement action. The authority has not inspected 40% of registered dealers, missing its three-year target. In 77% of inspections that uncovered violations of the law, OMVIC’s inspectors closed the file without taking any enforcement action or performing a follow-up inspection.
The Auditor General said that OMVIC didn’t take action on evidence of dealer compliance problems by two organizations, Car Help Canada and the Automobile Protection Association, to which it gave a million dollars over four years to conduct mystery shopping. “… a total of approximately $1 million [was provided] to conduct mystery shopping at 397 motor vehicle dealers,” the report said. “The associations identified that 167 of the 397 dealers they visited attempted to charge fees in excess of a vehicle’s advertised price —violating the all-in-price advertising requirement. However, we found that OMVIC had not taken enforcement action against any of these dealers.”
OMVIC’s accumulated surplus and reserves increased from $6.3 million to $23.6 million from 2015 to 2020. The report also noted the Ministry of Government and Consumer Services has “not sufficiently overseen OMVIC to confirm that OMVIC effectively fulfils its mandate.”
The report similarly found the Ontario Securities Commission to be dominated by board members with backgrounds in the industry rather than in investor protection, and recommended that having more members with experience in investor protection would assist the commission in fulfilling its mandate to protect investors.
The report noted that the OSC did not follow its own established process for board appointments twice in 2019, was “vulnerable to political interference, which risks undermining its independence and impartiality, as well as to lobbying by industry stakeholders.” It also hammered at the failure to adopt requirements to force investment dealers to act in the overall best interests of their clients. Further, the Auditor General found the OSC does not have adequate power to secure payment of fines. The commission has collected just 28% of $525 million of monetary sanctions imposed over the past 10 years and the fund in which sanction money is kept “is not being fully used to benefit the investor community”, paying out little to investor compensation or representation.
The Auditor General’s report on Internet Gaming in Ontario expressed concern of the governance of iGaming Ontario, noting “an inherent conflict of interest has been established in legislation between iGaming Ontario’s goal of operating profit-based revenue for the province and [supervising body Alcohol and Gaming Commission of Ontario’s] goal of effectively administering regulatory oversight of the gaming sector.” The report said that “a significant amount of decision-making power and business risk will rest with private operators.” Because there is little public information about how iGaming Ontario will protect consumers, key responsibilities to maintain integrity and fairness have been “entrusted to the private sector such as direct testing of internet gaming systems, game design, gaming systems, determination of payouts, and odds-setting.”
Private career colleges are designed to provide specialized education, but the government “does not have a comprehensive education strategy to link labour market needs with vocational options, thereby missing an opportunity to balance the supply of career college and other post-secondary education with the demands and expectations of local communities.” So while the government reports that more than 80% of private career college students were employed after graduation, only about 60% were employed in their field of study.