New incentive to settle client complaints

New incentive to settle client complaints

New incentive to settle client complaints The Ombudsman for Banking Services and Investments made a housekeeping move last week that drastically alters the confidentiality and disclosure requirements for its dispute resolution process putting advisors in a potentially unflattering position.

“The changes are being made to meet regulatory expectations and requirements,” noted the OBSI statement. “Now the identity of the complainant and their financial advisor (if applicable) will be shared with the appropriate regulator.”

The OBSI considers it a tweak to its terms of reference but with most compensation recommendations being ignored by firms involved in the dispute resolution process, if advisors of those firms have their names revealed to the appropriate regulators, it’s likely they’ll want their firms to alter their tactics in order to maintain their reputation.

The big question is whether or not the firms will play along.

“Until now you’ve been required to sign a confidentiality agreement. I assume that now [OBSI announcement} it’s going to change,” says Toronto advisor Tony De Thomasis. “I’ve been involved in just one OBSI case. It’s really one sided. The last one the OBSI reported on they blamed the dealer because the advisor was selling limited market securities and was doing it off the dealer’s book. They still blamed the dealer because it should have done a better job patrolling what the advisor was doing.”

Advisors caught up in OBSI cases given this change aren’t going to want to take the chance that their name gets out in the press despite the fact the information won’t be disclosed to the public but rather to the appropriate regulators and in certain circumstances the OBSI board of directors.

“If one guy has one claim, it doesn’t matter, you’re forced to settle,” says De Thomasis. “If you don’t settle you’ll never get your reputation back, especially the advisor.”

So, the OBSI inadvertently might have created a giant game of chicken. The question is whether advisors should be concerned a little or a lot.

Time will give us the answer.
  • Barb Amsden 2015-07-03 11:32:48 AM
    I haven't found anything on the Ombudsman's website for details (the information goes to the lead regulator but does it go public in all cases?). What this may do is clear those low value ones where a little bit of pride gets in the way of resolution. For serious cases, this always should have been happening and was something recommended some time ago. However, the issue of an advisor's reputation is a serious - financial-security-threatening and personally painful - issue when a charge is unfairly brought or there was an honest misunderstanding and shared responsibility. There is no putting the genie back in the bottle with the internet. Any more details will be welcome.
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  • Sandra Kegie 2015-07-03 1:20:16 PM
    This is a good step, the right step, but still doesn't go far enough. OBSI should be able to 'name and shame' the advisor where it is clearly a case of the advisor acting outside of the supervision of the dealer and the dealer did not and could not have known about the activities. The advisors may not pay, but the dealers who haven't paid in the past, might be more inclined to. In those cases rather than them looking like the bad guy that they aren't, they'll look like to good guy for paying where the advisor did not.
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