The Globe and Mail reports this morning that Finance Minister Jim Flaherty's proposal to overhaul Canada's banking dispute settlement system "looks suspiciously like a gift to the country's big banks." Barrie McKenna writes:
The changes are a direct and significant challenge to Canada’s existing national ombudsman – the Ombudsman for Banking Services and Investments (OBSI), headed by Douglas Melville. The minister’s eight-paragraph press release doesn’t even acknowledge the existence of OBSI, which has handled thousands of complaints and secured millions of dollars in compensation in the past decade.
OBSI was created in 2002 by the country’s banks, under a threat from Ottawa to impose a federal arbitrator. But the banks have never fully embraced their offspring. It’s seen as overly costly ($8-million budget in 2012, intrusive and often embarrassing. Among other things, Mr. Melville tracks which banks face the most complaints (a dubious honour that went to Toronto-Dominion Bank in 2011).
Flaherty dropped the news on a Friday afternoon, a time traditionally chosen for burying a story. Flaherty knows that Barclay's Bank is in turmoil for its attempt to fix the LIBOR rate. If you want to help the banks these days, it's best the public doesn't know about it.
It's pretty clear that ordinary citizens -- once again -- are getting the short end of the stick:
An already weak system is being watered down even more. Anita Anand, an associate law professor at the University of Toronto, said the proposed changes are unlikely to be consumer-friendly.
“A single system that applies to all firms would be preferable because it provides certainty for consumers,” Ms. Anand said.
The shift to multiple dispute resolution providers is also conceptually at odds with Mr. Flaherty’s push for a single, strong national securities regulator, she suggested.
In a submission to the Finance Department, investor advocate and blogger Ken Kivenko said the private-sector system will add “opaqueness and secrecy,” weaken consumer protection and undermine OBSI’s ability to fund itself over the long-term.
This all may suit the banks.
The Harper government has never seen itself as a referee, whose purpose is to reach a just settlement in a dispute. In foreign affairs, in labour relations and now in banking, it has defined its mission as taking a side -- and helping its chosen side win.
It's interesting that the winners are never the citizens who elected -- however dubiously -- this government.