Jean-Paul Bureaud outlines his organization’s support for CSA proposal which would see OBSI given wider oversight powers
Jean-Paul Bureaud sees the industry pushing back against a proposed framework set to change the way client complaints are handled. The Executive Director and CEO of FAIR Canada was one of a set of signatories on a recent open letter urging the industry to adopt proposed reforms from the Canadian Securities Administrators (CSA) which would give the Ombudsman for Banking Services and Investments (OBSI) the power to make binding decisions without the option of a third-party appeals process.
Bureaud outlined what he sees as an industry pushback against these reforms addressing three core points: a call for judicial appeals, a cap on dollar amounts for OBSI binding decisions, and a claim that the OBSI is biased against firms. He addressed each point while making the wider point that these reforms are — in his view — an important piece of consumer protection and a reputational safeguard for the industry.
“I think there are lots of benefits to the industry,” Bureaud says. “First and foremost, I think this will help create a framework that offers a clear, consistent and independent process for resolving complaints that their clients have, and that's important. I think [advisors] clients will feel greater trust and confidence in the system, and that will help strengthen their relationship with their clients.”
Bureaud addressed each of the three major points of pushback he sees from the industry, starting with the calls for a judicial appeals process. He notes that the existing OBSI process endeavours to bring about an acceptable compromise resolution and that formal recommendations will be made when compromise is impossible. Moreover, the proposal by the CSA would give all parties the right to request that a decision be reconsidered.
He argues, though, that allowing for an external judicial review would “undermine” the framework’s goal of redressing what is seen as an imbalance in the system. A judicial review, he argues, would favour firms’ as they can drag things out for longer, while clients may not be able to afford to hire a lawyer or bear the challenge of a delay.
The calls for a monetary cap on OBSI binding decisions, Bureaud notes, come in the context of an existing cap of up to $350,000, which should remain in place. The suggested caps by industry stakeholders Bureaud has seen, though, range from $100,000 down to $25,000. He argues that by setting such a low cap the process would create two classes of complaint. Complaints under the cap would be eligible for faster and more complete resolution through the OBSI, while complaints over the cap would require either a lowball settlement or a lawsuit.
The final point that Bureaud sees voiced in the industry pushback is a claim that the OBSI is biased against firms. He believes this argument is rooted in a misconception and points out that over the past five years, the OBSI has found in favour of firms 67 per cent of the time. Moreover, he claims that investors had been short-changed over $1.8 million since 2018 by firms offering settlements below the OBSI’s recommended dollar amount.
“It’s not a system that is in any way biased towards the investor,” Bureaud says. “It’s a system where the industry holds many of the cards and has the ability to exploit its dominant position in that relationship.”
While highlighting and arguing against the industry’s pushback, Bureaud tries to frame the CSA’s proposed framework in more positive terms as well. He argues that these reforms could help the industry improve its reputation. He claims that some advisors “don’t treat their client complaints fairly or appropriately,” and believes that these reforms will help deal with those members of the industry who he perceives as doing reputational harm to the whole business of financial services.
He argues, too, that these reforms should reduce the regulatory burden on advisors and firms. He notes that under the current framework, all parties are subject to long drawn-out processes that can leave everyone unhappy with the end result. He believes the proposed framework will allow for quicker resolutions, a greater degree of finality, and more time for advisors to simply focus on their clients. He hopes that firms, too, will see this process as a more efficient and streamlined way to handle client complaints, reducing the compliance burden that so many industry players struggle with.
“I hope the industry sees the CSA proposal as a positive evolution of the complaint handling system, certainly not revolutionary. I do think it will strengthen trust and accountability within the system,” Bureaud says. “I really would encourage the industry to view this as an opportunity to lead with integrity and focus on ways to enhance public confidence. Long-term growth in our markets depends on trust, and I think these reforms are an important element of trying to help build trust in the context where there are complaints that can't be resolved at the firm level.”
