Banking watchdog to track dementia-related cases

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Canada's banking ombudsman is preparing significant changes to the way it handles complaints against the country's financial institutions in a bid to track cases that involve people who suffer from dementia.

The decision will help the federal government and 600 banks and financial services across the nation gauge, for the first time, just how badly Canadians with diminished capacity are being mistreated when it comes to their money.

The Toronto-based Ombudsman for Banking Services and Investments (OBSI), the agency responsible for resolving consumers' disputes with most Canadian banks and investment firms, plans to create a national case registry that will flag complaints in which dementia may be a factor.

With the aging of Canada's population and the increasing number of people whose decision-making abilities may be impaired, the OBSI wants to pinpoint the extent of a problem that it has long suspected is growing but has had no way to assess. Last year, the agency's investigators across the country opened a record 990 case files, about 40 per cent of which involved the elderly.

The move follows a Globe and Mail report this week that detailed extensive problems within the banking and legal systems because they are not equipped to cope with the effects of an affliction that impairs judgment and makes an individual more vulnerable to deception. A half-million Canadians currently suffer from some form of dementia, a figure the Alzheimer's Society of Canada expects to reach 1.1 million within a generation, although the federal government has no strategy for coping with what many experts predict will be a socio-economic crisis.

The Globe report detailed several cases in which financial advisers or relatives took advantage of elderly people by arranging transactions not in their best interest. Some patients were talked into co-signing loans, transferring money or power of attorney, or putting money into risky investments, in some instances losing hundreds of thousands of dollars.

Bank officials say their staff are uncomfortable and unqualified to assess a client's mental prowess, but as part of the new initiative, OBSI plans to recruit a specialist who will advise players in the financial system of concerns dealing specifically with dementia. This expert will advise the ombudsman's office and the banks how best to resolve complaints that involve dementia and how to improve staff training.

Douglas Melville, a lawyer who became head of OBSI a year ago, said the ombudsman's office wanted to act quickly because it worries that the financial system doesn't grasp the extent of the problem.

"I hope what it does is flag ... how much of an issue this is for us," he explained. "The complaints are an early-warning system, really - the canary in the coal mine."

Because the banks do not share data about complaints among themselves, OBSI is better positioned to glean more thorough information on broader trends - the 990 cases launched last year represented a rise of almost 50 per cent from 2008. Compensation was awarded in 222 cases.

At the request of The Globe and Mail this summer, the office began combing its case files to see how many complaints may have involved dementia. Mr. Melville said that when he polled OBSI's investigators about the problem, there was an epiphany. "I had people putting their hands up."

The biggest potential benefit of the changes, he said, will come years down the road when OBSI can start to evaluate the growth of the issue.

"If you asked me how many [dementia cases]we had three years ago, I have no way of answering that," Mr. Melville said. "We literally have to go back into the files one by one and poke through and see if we could spot any.

"It's tragic to see these stories come in."

The hope is that, with accurate statistics, customers can be educated about possible pitfalls and employees trained to spot such problems as a clients being pressed to withdraw large sums of money or to co-sign loans. As well, OBSI believes the information will help government improve public policy.

The goal is to recruit the new specialist in seniors and dementia-related problems within the next few months. "What we're looking for," Mr. Melville said, "is to engage someone familiar with these issues to provide input to our organization, but particularly to our board of directors."

Now that dementia is on the financial community's radar, he added, "we're making it a governance issue to do this right."

1996: The Canadian Banking Ombudsman is created as a "court of last resort" for customers after a threat by Ottawa to launch a national customer advocate in the wake of a flood of complaints from small-business owners angry about the banks' lending practices.

2002: After government, industry and consumer groups seek ways to improve consumer protection, the agency is expanded to include investment firms and other players covered by federal financial-services laws, and the name is changed to the Ombudsman for Banking Services and Investments.

Powers: The office had a staff of 48 at the end of 2009, and maintains a call centre able to field questions and complaints in more than 170 languages.

OBSI can recommend up to $350,000 in compensation. Its rulings are not binding, but it makes public any bank that refuses to comply.

Record: Last year, the agency opened a record 990 case files, of which 599 involved the investment industry and 391 the banks.

It called for compensation in 222 cases (151 investment and 71 banking), all of which were accepted by the firms involved. A financial institution's position was upheld in 558 cases, and seven more were withdrawn by the client.

Staff