When Douglas Melville quit his job recently, media accounts referred to him as Canada's "long-serving" financial services ombudsman.
Long-suffering might be a more apt characterization of Mr. Melville's six years as Ombudsman for Banking Services and Investments.
During his tenure, he endured a cold shoulder from Ottawa, defiance by the country's two largest banks, and a rash of companies ignoring his orders to compensate victims.
Few Canadians even know who Mr. Melville is, or what he does. And now he's leaving.
Investors and depositors deserve a strong and effective bank ombudsman.
With workplace pensions no longer the norm, Canadians are increasingly masters of their own financial destinies. But they are masters in a world fraught with market risk, imperfect regulation, befuddling products, powerful players and often unseen incentives paid to advisors.
OBSI should help level the playing field and protect customers from blatant abuse.
It's not at all clear that's what they have been getting.
The organization was created by the banking industry in 1996 in the face of threats by Ottawa to impose a federal arbitrator to handle customer disputes. It has since expanded its mandate to cover brokers, mutual funds, portfolio managers and other investment dealers.
OBSI acts as an independent arbitrator and can "recommend" compensation in disputes worth up to $350,000. Its services are free, offering depositors an alternative to expensive litigation for disputes over such things as excessive fees, unauthorized transactions and even fraud. Last year, it opened 570 case files – the lowest total since the 2009 financial crisis.
A key flaw is that banks and brokers are under no obligation to actually pay up when found guilty. Beyond public exposure, there are no consequences for companies that refuse to pay.
And last year, eight companies brazenly ignored OBSI recommendations to compensate customers, continuing a trend that began in 2012 when the organization began naming and shaming non-payers.
The vast majority of disputes are settled successfully. But OBSI chairman Fernand Bélisle acknowledged in OBSI's 2014 annual report there is "weakness" in the system. Refusals mean investors are "left without compensation that was warranted given the particular facts and circumstances," he said. In a number of other cases companies coerced customers to accept "low-ball" settlement offers by threatening to pay nothing.
Part of OBSI's problem is that neither the government nor the industry genuinely has the organization's back. They tolerate its existence, but are leery of giving it real power.
Banks have never fully embraced their own creation, seeing the Toronto-based organization as costly, plodding and often embarrassing. Royal Bank of Canada quit the organization in 2008 and the Toronto-Dominion Bank left in 2011 – the same year that OBSI fingered TD as the institution facing the most complaints.
In 2012, the Conservative government decided that it would not force the recalcitrant banks back on board. Instead, it opted to let them hire their own private ombudsmen, provided they followed broad federal guidelines. RBC and TD now use ADR Chambers, a private dispute-resolution company.
Lukewarm industry and government support has opened the door to a culture of contempt in some corners of the financial services industry. Given that it has relatively little clout, its authority and legitimacy depends heavily on perception.
And that raises the question of who would want Mr. Melville's job (He apparently no longer did, accepting instead to become financial ombudsman for a tiny upstart organization for the Channel Islands of Guernsey and Jersey).
In his resignation announcement, Mr. Melville acknowledged the "difficult period" the organization has endured, but insisted it is now "stronger and better equipped to face the future."
OBSI is a quasi-judicial agency controlled by the industry. It is awaiting formal designation by Ottawa as an "external complaints body" under the Bank Act.
Canadians should demand an ombudsman who speaks with a consistent voice for the entire financial services industry, not a toothless voluntary regulator.
As a condition of taking the job, Mr. Melville's successor would be wise to demand the power to levy fines and debar companies who refuse to play by the rules.
If that happens, the next ombudsman might actually garner a bit of well-deserved public profile.