OBSI 2022 Annual Report released: Complaint inquiries and opened cases reach new record highs in 2022, fraud complaints dramatically rise

TORONTO, March 16, 2023 (GLOBE NEWSWIRE) — The Ombudsman for Banking Services and Investments (OBSI) released its 2022 Annual Report.

In 2022, OBSI responded to over 10,000 public inquiries – a 40% year-over-year increase from the record levels reached in 2021. This was largely driven by banking inquiries that rose 56% compared to 2021. Investment inquiries increased by 8% year over year.

In total, OBSI opened 1,151 cases in 2022, establishing a new record with a year-over-year increase of 6% from the previous record set in 2021.

“These higher volumes continued a trend we have seen throughout the pandemic period, as Canadians, small businesses and financial services firms continue to cope with unprecedented economic challenges, increasing levels of financial stress, and increasing rates of financial fraud,” said Sarah Bradley, Ombudsman and CEO, OBSI.

Banking cases increased 33% year over year to 686 in 2022, up from 514 cases in 2021.

“In addition to the broad social and economic stresses consumers are facing, the record-high banking case volumes stemmed from important recent regulatory changes to the Bank Act’s financial consumer protection framework that were intended to, and in fact have, resulted in reduced complainant attrition. More consumers than ever are making use of Canadian banks’ internal complaint-handling services to resolve their concerns and a record number are escalating their concerns to us for an independent expert review of their case,” said Ms. Bradley.

Investment cases decreased overall by 18% in 2022 to 465, down from 568 cases in 2021 and on par with the number of cases opened in 2020.

“Investment cases started the year with some moderation to near pre-pandemic levels, but surged later in the year, largely driven by investor concerns relating to ongoing market downturns and volatility, as well as increasing problems associated with fraud and service issues,” said Ms. Bradley.

Banking case highlights

Fraud was the leading issue for banking complaints again in 2022, representing 31% (215 cases) of OBSI’s total banking case volume, up from 22% (111 cases) in 2021. Fraud cases accounted for a large portion of the complaints involving e-transfers, credit cards and wire transfers.

Concerns about service issues made up 19% of banking complaints overall. Credit card chargebacks accounted for 7% of all banking cases, a decrease from 14% in 2021. Notably, complaints related to interest rates rose from 9 cases in 2021 to 26 cases in 2022.

The top banking product concerns raised with OBSI by consumers in 2022 related to credit cards, personal chequing and savings accounts, and e-transfers. Credit card complaints were the subject of 32% of all banking cases, while personal savings and chequing account complaints followed at 15%, and e-transfer complaints accounted for 14% of all banking cases, an increase from 7% in 2021.

Investment case highlights

The leading investment issue in 2022 related to service problems (technical and non-technical), representing 21% of investment cases, up from 16% in 2021. Concerns about investment suitability made up 15% of complaints, up slightly from 14% in 2021, while fraud cases climbed dramatically to 11% of overall cases from just 1% in 2021. Notably, cases related to fee disclosure declined from 11% of investment cases in 2021 to 8% in 2022.

Mutual funds were the most complained-about investment product, representing 37% of all investment complaints, up from 27% in 2021. Common shares (equities) decreased to 33% in 2022, from 43% in 2021. Crypto assets, which are a new product category for 2022, accounted for 11% of all investment cases, becoming the third most common complaint for investors this year. The rise in crypto asset complaints is associated with the increasing regulatory oversight of cryptocurrency dealers, which led to a number of dealers joining OBSI in 2022 as participating firms.

Systemic issues and disclosures to regulators

In 2022, OBSI continued its practice of discussing systemic issues and issues affecting multiple consumers regularly with financial services regulators. During the year, a range of topics were discussed at meetings with regulators including:

• Detailed aggregate data including:
  • Products, issues and outcomes details and trends
  • Specific (anonymized) case outcomes and summaries
  • Additional information relating to cases involving low settlements
• Pandemic impacts on the Canadian financial services sector
• Service standards and delivery at order-execution only (OEO) or do-it-yourself (DIY) investment platforms
• Cryptocurrency fraud cases
• Trends in complaints relating to unsuitable investments

Additionally, a case-specific, investment-related systemic issue involving an online platform’s failure to acknowledge or accept responsibility for a technical platform issue that prevented investors from closing certain trades over a multi-day period was reported to securities regulators.

Canada’s Ombudsman for Banking Services and Investments (OBSI) is a national, independent and not-for-profit organization that helps resolve and reduce disputes between consumers and financial services firms in both official languages. OBSI is responsive to consumer inquiries, conducts fair and accessible investigations of unresolved disputes, and shares its knowledge and expertise with the stakeholders and the public. If a consumer has a complaint against an OBSI participating bank or investment firm that they are not able to resolve with the bank or firm, OBSI will investigate at no cost to the consumer. Where a complaint has merit, OBSI may recommend compensation up to a maximum of $350,000.

For more information, please contact:
Mark Wright, Director, Communications and Stakeholder Relations
416-287-2877 ext.2225
publicaffairs@obsi.ca