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OTTAWA May 1, 2012 – 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:
Public Interest Advocacy Centre