New single-window OmbudService announced for financial services sector

TORONTO, Dec. 20 – Five major industries of Canada’s
financial services sector — banks, life and health insurers, property and casualty
insurers, investment dealers and the mutual fund industry — today announced the creation
of a National Financial Services OmbudService (NFSO). This new service, which is planned
to be in place by July 1, 2002, will provide more than 95 per cent of Canada’s financial
services consumers with single-window access to recourse if they have concerns or complaints.

This industry-based, integrated consumer assistance
service, which builds on long-established consumer redress mechanisms already in place,
has at its heart a new organization, the NFSO Centre, which will provide a central contact
point (1-800 phone number, Web site, etc.), establish and maintain standards, undertake
awareness-raising and provide reports on the new system.

The core components of this service are:

  • the individual companies in the participating industries and
    their ongoing complaints management activities;

  • industry-level consumer recourse mechanisms which will include independent, impartial
    Ombudsman services for consumers whose complaints have been dealt with at the company level and wish
    to pursue their complaints further; and

  • the new NFSO Centre.

The NFSO has been endorsed by the Joint Forum of Financial
Market Regulators, the Canadian Council of Insurance Regulators, the Canadian Association
of Pension Supervisory Authorities and the Canadian Securities Administrators.


The National Financial Services OmbudService is an
industry-based integrated consumer assistance service, which has at its heart a new
organization, the NFSO Centre, which will provide a central contact point (1-800 phone
number, website, etc.), establish and maintain Standards, undertake awareness-raising and
provide reports on the new system.

Whether the consumer’s concern or complaint relates to a
bank account, life or health insurance policy, home or auto insurance policy, stock
portfolio or mutual fund, the NFSO initiative will make it possible for the consumer to
access, with one phone call, a new central consumer recourse organization which will put
the consumer in touch with someone who will provide prompt, knowledgeable and fair assistance.

The Ombudsman Services

Each of the participating industry groups will sponsor an
Ombudsman service. All of these will operate independently of the industry association and
have their own Board with a majority of independent directors. When they receive a
complaint, these mechanisms will fully assess the issues at hand, work fairly and
impartially with both the consumer and the company, and produce a report, including recommendations.

If in the first instance the NFSO determines that the
consumer has not yet talked to his/her financial institution, the consumer will be put in
touch with the appropriate consumer relations specialist at that institution.

However, if the concern or complaint has been fully dealt
with at the level of the individual financial institution concerned and the consumer
remains dissatisfied and wishes to pursue the matter further, the NFSO will provide access
to the independent Ombudsman service responsible for the complaint in question as noted above.

Setting Standards

A commitment to respect a consumer-oriented set of
Standards will be a condition of NFSO membership. System-wide Standards applicable to all
of the NFSO’s participating organizations will include accessibility, timeliness,
courtesy, accuracy and consistency. Moreover, additional Standards applicable to the
Ombudsman services provided by the industry-level mechanisms will include
knowledgeability, confidentiality, fairness and impartiality, as well as independence and
objectivity. The Board of the new NFSO, which will have a majority of independent
directors, will be responsible for establishing and defining in operational terms these
Standards and for ensuring periodic external verification of compliance with them.

The NFSO will produce an annual report on the system as a
whole, including the industry-level mechanisms, and make it available to all interested parties.

What the Participants are Saying

“The NFSO will enhance existing dispute resolution
methods and offer consumers a simpler, one-window approach for resolving problems across the
financial services sector,” said Raymond Protti, President of the Canadian Bankers Association.

“Clients will now have easy access to an effective
consumer complaint service,” said Joe Oliver, CEO and President of the Investment
Dealers Association of Canada (IDA) and the Mutual Fund Dealers Association of Canada
(MFDA). “We appreciate the leadership and support of British Columbia Securities
Commission Chair Doug Hyndman, who led the special task force of the Joint Forum of Financial Market
Regulators, and Jim Peterson, Secretary of State (International Financial Institutions).”

“The sponsoring industries will work towards
implementing the NFSO over the months ahead, during which time we will welcome expressions
of interest from other players in the financial services sector,” said George
Anderson, President of the Insurance Bureau of Canada. “We look forward to providing
further details on the operation of the NFSO at the time of its official launch.”

“We fully support this initiative,” noted Thomas
Hockin, President of the Investment Funds Institute of Canada, “and we are committed
to working with our partners in the financial services industry and with the federal and
provincial regulators to ensure that the NFSO initiative serves consumers well.”

Canadian Life and Health Insurance Association President
Mark Daniels said that “over the past, many months of intensive effort and discussion
which have led to this important announcement, the industry groups were able to depend on
the strong support and confidence of the federal Secretary of State (International
Financial Institutions), the Hon. Jim Peterson, who to his credit, told us from the start
that he was prepared to listen to our proposal and encouraged us at every step of its development.”